Spring Statement 2025: The Key Points

Key information from the Spring statement 2025:

Economic forecasts

• The Office for Budget Responsibility (OBR) has updated their forecast for this years’ growth, from 2% to 1%.
• National insurance, income tax and VAT rates remain unchanged.
• National Living Wage increases to £12.21 p/h, from 1st April.
• Estimated growth for the next four years has also been updated to 1.9% next year, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.
• Inflation forecast to average 3.2% this year, up from 2.6% from the previous forecast, before falling back to 2.1% in 2026.
• Inflation is expected to meet the 2% government target in 2027.
• The OBR says the government's changes to the planning system in England will increase the size of the economy by 0.2% by 2030

Welfare changes

• Health-related universal credit for new claimants will also now be frozen in cash terms until 2030.
• The standard allowance for universal credit will now rise to £106 per week.
• Existing claimants’ health-related payments will be frozen in cash terms until 2030.
• There will be a stricter eligibility test for personal independence payments (Pips), the main disability benefit, from November 2026.
• Incapacity benefits to be frozen in cash terms for existing claimants at £97 per week from April 2026, with a top-up payment for those with the most severe conditions.
• People aged under 22 will no longer be able to claim the incapacity benefit top-up of universal credit.

Defence and overseas aid

• Defence spending, which had been due to rise £2.9bn next year, to increase by a further £2.2bn.
• Ministers say the spending will be funded by reducing overseas aid from 0.5% to 0.3% of the gross national income in 2027.

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