The Office for Budget Responsibility confirms it is cutting its 2025 growth forecast from 2% to around 1%. This puts UK Chancellor of the Exchequer Rachel Reeves in an awkward position, but what does the wealth sector say after the Spring Statement?
Theo Chatha, CFO, Bibby Financial Services
The Chancellor’s Spring Statement will be a huge disappointment to the UK’s small and medium sized enterprises. We know 87% of SME business leaders are eager to invest and nearly half were deferring major investment decisions until after today’s Statement.
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Will SMEs feel more confident after today’s announcements? Likely not, and we could see a worrying continuation of this “wait and see” approach as businesses further delay decisions on areas of investment such as machinery, technology and recruitment – resulting in an economic lag for the UK.
Off the back of an unpopular Autumn Budget and with increased employer National Insurance contributions and business rates set to rise, today’s statement was a missed opportunity to support the UK’s SMEs.
Dan Boardman-Weston, Chief Executive, BRI Wealth Management
The Spring Statement was largely as expected, with growth expectations being cut, defence spending being increased, and the evaporated fiscal headroom being restored by cuts to benefits and central government. Markets have shrugged off the announcements as they have bigger things to concern themselves with at the moment. The UK remains in a precarious position and deep structural reform is required to set the country back on the right track. Whilst a number of the headwinds that the country has seen in the past few months are not the fault of the government, a number are, and little that we’ve seen or heard will deliver the change that this country requires.
Helena Luckhurst, Partner, Fladgate
In a major change to the current rules, from 6 April 2025, anyone who is not ‘Long-term UK resident’ (LTR) is outside of the UK’s Inheritance Tax (IHT) net, at least for their non-UK situs assets.
For individuals aged 20 or older, LTR status means they must have been UK resident for at least 10 of the previous 20 tax years. However, once an individual ceases to be UK resident, LTR status is also phased out on a sliding scale of between three to 10 years. For example, if the individual was UK resident for 13 of the past 20 tax years before becoming non-UK resident, they will lose their LTR status after three tax years of non-UK residency. If they were UK resident for 16 years, they lose LTR status after 6 tax years of non-UK residency, and so on.
Under the current law, returning Brits who are ‘formerly domiciled resident’ have their worldwide assets exposed to IHT after a grace period of only one tax year – not a very generous ‘welcome home’. Fast forward to 6 April 2025, and it’s a completely different picture for returning Brits who have been abroad for at least 10 consecutive tax years in the previous 19. Their non-UK situated assets are not subject to IHT for 10 years, beginning with the UK tax year of their arrival – a very nice welcome home.
Of course, you don’t have to be a Brit to enjoy this IHT treatment but the contrast between the current rules and the soon to be current rules could not be starker for those born in the UK with a UK domicile of origin in particular.
Accurate records of UK tax years of residency will be critical. Taxpayers may need help from their tax advisers with this.
The change is also a significant win for Brits who intend to stay abroad. Under current rules, individuals living abroad who retain their UK domiciles (actual or deemed) are exposed to IHT on their worldwide estates, regardless of where they are tax resident. It’s hard to lose a UK domicile if you like to move between different countries or intend to return to the UK upon retirement. From 6 April 2025, ex-pats just need to work at staying ‘not LTR’ if they want to keep their non-UK situs outside the clutches of IHT.
George Lagarias, Chief Economist, Forvis Mazars
Markets don’t hate big budgets nearly as much as they hate big surprises. The bond market is largely unchanged before and after the budget, suggesting that the Chancellor has managed to play all the right notes by carefully setting expectations and then sticking fairly close to them. The UK needed to spend big on Defence and Healthcare, without completely gutting other services. Chancellor Reeves intoned as many times that she would stick to her fiscal rules, as the markets needed to hear.
Given the deteriorating global economic outlook, the OBR had little choice other than to bring growth expectations down, closer to market consensus of nearly 1%. This is a realistic assessment of things, and sends a very clear signal to the markets that the UK government is playing by the rules.
Susannah Streeter, head of money and markets, Hargreaves Lansdown
The Chancellor’s statement was a game of two halves, and it’s been reflected in sharp market movements. Rachel Reeves appeared to be on the losing side of investor sentiment with downgrades to growth this year, but scoring goals of optimism with upgrades to GDP further ahead, and forecasts for real disposable income to rise in the months to come. The FTSE 100 and FTSE 250 lost ground and then made handbrake turns as hope rebounded about flickers of growth. 10-year gilt yields also jumped higher, as some bond investors baulked at extra investment revealed, but then dropped back sharply a little as prospects for growth rose, easing the squeeze on the public finances. Housebuilders climbed back up from disappointment, amid hopes that a growing economy and more money in the pockets of buyers, amid a commitment to ramp up building, will lead to more completions ahead.
The extra defence spending will be welcomed by defence contractors but there were not any significant moves in the share prices of big names, given that much of the budget will be reserved for seed investments, startups and accommodation upgrades. Nevertheless, optimism surrounding the sector remains.
There were no big surprises in this statement, and that’s exactly what the Chancellor intended. Stability is right at the cornerstone of the government’s agenda, and she appears to have done the trick of not unnerving investors further. She has made it clear she’s not for turning, and won’t break her fiscal rules. It’s still not going to be easy going forward despite the wiggle room in the years to come the Office for Budget Responsibility has forecast. The UK is not blessed with lower debt to GDP levels like Germany, which has enabled the country into lifting its borrowing brake. With eyes trained on investment to propel longer-term growth, the government will still have limited room for manoeuvre to deal with incoming trade disruption. The hope is that UK will still be seen as a steady, if sluggish, ship in the storm brewing amid the threat of further tariffs from the US.
Sam Hields, Partner, OpenOcean
The Chancellor’s Spring Budget sends a more balanced signal on innovation-led growth. While backing the Oxford-Cambridge Arc as ‘Europe’s Silicon Valley’ may win headlines, the chancellor’s commitment to strategic partnerships with regions like Greater Manchester, West Yorkshire, and Glasgow through the National Wealth Fund is just as critical.
To build a globally competitive industry the government must back regional tech hubs across the country. AI and enterprise software startups are scaling up outside London and the South East, with Belfast and Manchester leading the way. Access to high-quality capital at market-standard terms will be vital to allow startups to grow where they are, rather than be sucked into London or across the Atlantic. Success stories like York-founded planning software company Anaplan, recently acquired for over $10.7 billion, show that world-class tech can be built outside traditional hubs.
“For founders and investors alike, confidence in the UK market hinges on more than flagship projects. It is crucial for the government to send a clear signal that the UK remains one of the best places to build, scale, and exit. That’s how we attract global talent, reverse the trend of startups listing abroad, and strengthen the entire venture ecosystem.
Andy Butcher, Branch Principal & Chartered Financial Planner, Raymond James
There are currently too few Brits investing, and even more may be put off it if they must complete a tax return for only modest gains. Investing is a great way to boost returns in the long term and prepare for retirement, while reducing the burden on the state in older age. With this in mind, the Chancellor not making any changes to capital gains tax, dividend and ISA allowances is a positive move. Reducing allowances would potentially discourage people from saving and investing, a harmful outcome to Brits who have already suffered under a high inflationary environment over the past few years.
“Despite inheritance tax (IHT) being paid by relatively few estates, the changes brought forth in the Chancellor’s Autumn Budget sparked significant backlash. Updates to business relief and agricultural relief have caused mixed reactions, with some business owners unsure whether to reinvest profits when they know an IHT liability is down the road, suggesting potential negative repercussions for UK businesses and the competitiveness of the UK market in the longer term. Any further changes to gifts and the seven-year rule would have also added complexity to the current situation, further incentivising business owners to sell up, defeating the purpose of a pro-growth policy. As such, the Chancellor’s decision to refrain from making further tax changes in today’s Spring Statement is a positive outcome.
Scott Primmer, Partner, Reeds Solicitors
The Spring Statement outlines how the Government intends to crack down on various types of Fraud. Unfortunately, rather than facing head on the costly and difficult tasks facing the tax system, such as combating international business tax avoidance in the UK and international money laundering, instead they have chosen to focus on picking over the bones of individuals and small businesses going into insolvency and stoking a business culture of paranoia and ultimately causing distrust in UK business by incentivising informants that is ripe for abuse.
Marc Acheson, Global Wealth Specialist, Utmost Wealth Solutions
Rachel Reeves stated that she has restored full headroom against the ‘stability rule’ through spending cuts rather than raising taxes and that the Government will be running a surplus of £9.9bn by 2029-30. However, with the OBR slashing growth forecasts in half for 2025, the risks are to the downside. Her headroom is wafer-thin and if economic conditions deteriorate and that headroom evaporates, it could pave the way for future tax rises later in the year if spending cuts prove insufficient to plug gaps.
There was nothing in this statement to stem the flow of non-doms, many of whom have been leaving to more favourable jurisdictions following the removal of IHT protections on existing settlements announced in the Autumn Budget. As a result, we can expect to see a continuation of non-doms and HNWs exiting the UK in the coming years, with significant ramifications for future tax receipts.
