PwC comments on the Spring Statement 2025

On Wednesday 26 March, the Chancellor Rachel Reeves, presented the Spring Statement alongside the latest economic forecast from the Office for Budget Responsibility (OBR). 

Below our experts comment on what was announced. 

Barret Kupelian, Chief Economist at PwC UK, said:

“Rachel Reeves course-corrected the Autumn Budget—and in doing so, road-tested the new fiscal rules for the first time. As expected, the fiscal headroom shrank by £14 billion because of slower than expected growth, but was restored with a careful mix of tax tweaks, spending cuts and reallocation. The clever bit? Rebalancing the day-to-day aid spending to capital-rich defence spending—capital gets a more favourable treatment under the new fiscal rules, and the government played that card well.

“But the centrepiece in this Statement wasn’t the numbers—it was the new framework. The fiscal rules now offer a degree of protection to public investment plans  meaning the government can stick to its capital investment programme devised last Autumn, giving businesses the policy certainty about the future. That’s good for confidence—and over time, good for private investment too.

“The Statement joins a wider international pivot amongst advanced economies toward more home-grown or domestic sources of growth. Rachel Reeves' interpretation of this is more defence spending on domestic suppliers, faster housebuilding with ambitious planning reforms, and a push to bring younger workers into the labour market. In short: investing in people, homes, and hard power. That’s the message coming out of the Spring Statement in a more unpredictable world.”

Rachel Taylor, Government and Health Industries Leader, at PwC said:

“A bold commitment to defence demonstrates what ambition can look like when you want to unlock growth. The Chancellor was transparent that increased defence spending is as much about economic security as well as national security, with knock-on benefits to jobs and skills, including through MoD spend allocated to new technology. Today is a good precursor to the industrial strategy and what levers the Government needs to pull alongside business to impact UK growth.

“We now need to see a similar focus for other priority sectors, but given the overall spending envelope for the Spending Review, unprotected departments will be looking at real term reductions so finding similar levels of funding will be difficult. It will be critical for business and government to work together to identify ways to collaborate to invest into digital technology, infrastructure and skills, without relying on financial handouts from the government.

“The Chancellor’s focus on driving stability and long-term growth is a welcomed step forward in improving the business environment - echoing the findings of PwC’s research that showed seven in ten (73%) business leaders believe that should be the primary focus of government.

“The biggest challenges identified by businesses as holding back growth are the supply of skills, digital transformation and developing UK infrastructure. The Chancellor’s statement made significant headway in all three elements in building the UK as a defence super power, focusing on innovation, capital investment across the UK and creating a skilled workforce.”