Spring statement's focus on stability welcomed

David Ward of Johnston Carmichael | Supplied

Johnston Carmichael’s tax experts have welcomed the Chancellor’s focus on stability in the Spring Statement but warned that the fiscal outlook remains challenging amid global unrest.

According to the accompanying Office for Budget Responsibility (OBR) report, the UK economy is expected to grow by 1.1 per cent in 2026, down from the 1.4 per cent originally forecast in November. Inflation is forecast to fall faster than previously thought, reaching 2.3 per cent this year.

While the Middle East conflict was acknowledged in the OBR’s forecasts, the projections did not take into account the impact of soaring energy costs.

David Ward, partner and Head of Specialist Taxes at Johnston Carmichael, said: “The UK Government advised that the Spring Statement would be boring, but in business, boring can be a very good thing. What businesses need above almost everything else right now is certainty, creating confidence to plan, invest and hire, especially as ongoing geopolitical issues create challenges.

“True to form for a Spring Statement, there was little change, but that doesn’t mean businesses don’t want action. Measures that support growth such as investment incentives and support with employment costs remain chief on the wish list for business owners and operators.

“The previously announced increase in the APR/BPR threshold was a welcome step and it is notable that Rachel Reeves promised measures to tackle youth unemployment, which has risen to more than 16% amongst 16-24-year-olds. Following the increased employment costs from recent Budgets, this is certainly needed in order to help this generation into work and helping businesses to hire.

“The Chancellor also announced she will soon provide details of a three-point economic strategy, focused on strengthening global trade ties, driving AI innovation and restructuring regional economies. As advisers, we look forward to hearing about her plans with great interest, but how much progress can be achieved remains to be seen. Automation has limits and exports will depend on demand, which is likely to be unstable as tariffs and conflicts take effect.”

Reflecting on the fiscal year ahead, David added: “The margins are tight for businesses still absorbing rises in the National Minimum Wage and National Insurance contributions, and increased energy bills will add to their challenges.

“Taxation works best as a stable, transparent framework that backs the people creating jobs and building businesses.

“In the current environment, consistency and predictability are themselves a form of stimulus. A tax environment that holds steady - where the goalposts don't move every few months - will provide businesses with the foundation they need to make long-term decisions with confidence.”

Meanwhile, Susannah Streeter, chief investment strategist at Wealth Club, commented: “The Chancellor was trying to project a 'keep calm and carry on' message, but market turmoil continued during her speech, with UK borrowing costs having shot up and London’s FTSE 100 deep in the red, staying around 2.6 per cent lower. Although there was a nod to the current turbulence, the forecasts don’t take into account the rapidly developing situation in the Middle East. So even though Rachel Reeves championed forecasts of a further fall in inflation, there’s a clear and present danger of the price spiral taking off again due to escalating conflict with Iran.”

Ben Thompson, director of home moving strategy at Mortgage Advice Bureau, said: “In the current climate, ‘no surprises’ is actually good news. We weren’t expecting fireworks from the Spring Statement, and in many ways that’s reassuring. Right now, the housing market doesn’t need dramatic announcements or last-minute policy changes - it needs stability. So a statement that leaves housing largely untouched is, in itself, a positive.”