Spring Statement 2025: A blow for retailers, hospitality and farming

“There are no quick fixes, but we have taken the right choice,” Chancellor Rachel Reeves said this week, delivering her first Spring Statement in Parliament, following a controversial Autumn Budget. 

Just hours after the Office for Budget Responsibility (OBR) made its own statement about the UK’s finances, halving its forecast for economic growth in the UK from 2.0 last autumn, to 1.0 this spring, the Chancellor said she stood by her decisions (including welfare reforms, investment in building and defence, increases to employer NI contributions and changes to agricultural Inheritance Tax), vowing to take serious action to stimulate the economy in light of the OBR’s figures.

In an almost 30-minute speech, the Chancellor said she was proud of what she called record investment in Britain, against a background of global economic instability, and promised that action taken so far means the Government can be more decisive in an increasingly uncertain world. 

There was a ‘doubling down’ on new, non-negotiable fiscal rules, of stability, by controlling spending, and investment, particularly in the building sector. 

Perhaps the only talking point for retail and hospitality was confirmation from the OBR that the average British adult’s disposable income will grow by a projected £500 this year. Whether this will encourage more consumers to spend on the high street, or be used to cover higher bills (as council tax, water and energy prices go up for householders in 2025) remains to be seen. 

Commenting on the Spring Statement, professor Joe Nellis, economic advisor at MHA, said it proved what was already known – that there’s no instant cure to the “economic malaise the UK finds itself in”. 

“The slashing in half of the OBR’s forecast for growth in 2025 to 1% is certainly a setback for the Chancellor,” Joe said. “Yet, this was a Spring Statement to calm the nerves, with no big surprises, and aiming to set the foundations for long-term sustainable growth. 

“After increased borrowing costs wiped out the Treasury’s fiscal headroom in the time since the October budget, the Chancellor was keen to reassure the financial markets by announcing that they would meet the investment and stability rules two years earlier than previously expected.” 

He continued, “She was also able to offer a glimmer of hope — the OBR predictions for growth next year and every year thereafter have been upgraded to 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029. 

The conditions for growth will need to be created. The Government will be hoping that investment in housebuilding and defence can be the driving forces behind this.” 

The British Independent Retailers Association (Bira) was disappointed the Spring Statement failed to address the crisis on our high streets, doing little to mitigate what it calls a “perfect storm” of cost pressures facing those in the retail industry. 

Bira CEO, Andrew Goodacre, said, “While we welcome the Chancellor’s focus on economic growth, we are deeply concerned that the Spring Statement has overlooked the immediate crisis facing independent retailers. Our members are confronting a perfect storm of rising costs – from the 140% increase in business rates to the National Living Wage rise and National Insurance changes – all while consumer spending remains subdued. 

“The Chancellor’s forecasts of improved household income may offer some long-term optimism, but they do nothing to address the immediate cash flow challenges our members face. Many independent retailers are making difficult decisions right now about whether they can continue trading under these conditions.” 

The organisation had previously outlined three key priorities for the Chancellor to address, including continued investment for town centres and high street, fully funded policing to address retail crime, and making economic development a statutory requirement for local authorities. 

“We specifically called for continued investment in our high streets, proper funding to tackle retail crime, and a statutory requirement for local authorities to prioritise economic development. It’s disappointing that Rachel Reeves has not responded to any of these crucial areas in her statement,” Andrew continued. 

“The Chancellor spoke about being ‘impatient for change’ and the British people being ‘impatient for change’ – our members are certainly impatient for meaningful support that recognises their vital contribution to local economies and communities. 

“Independent retailers are naturally resilient and optimistic, but even the most positive business owners are finding it difficult to maintain that outlook in the current climate. If the Government truly wants to ‘deliver prosperity for working people,’ as the Chancellor stated, they must not forget the thousands of independent retailers who provide jobs and services in communities across Britain.” 

Bira urged the Chancellor to reconsider her approach before the full budget in the autumn, and to engage “meaningfully” with the independent sector to prevent further closures and job losses. 

Mark Williams, managing director EMEA at WorkJam, whose customers are some of the UK’s biggest hospitality providers, also expressed disappointment, describing the £7 billion rise in labour costs businesses will experience as a result of Labour’s NI contribution rises in April, as untenable, putting too high a burden on an industry he says is already crippled by other additional costs. 

“The extension of the Retail, Hospitality and Leisure (RHL) Business Rates Relief scheme into the next financial year will not even touch the surface of the kind of support businesses need at this turbulent time, especially at a reduced rate of 40%,” he explained. “While cost-cutting measures during the COVID-19 period were seen as necessary, frontline workforce industries are now being forced to optimise costs and improve efficiencies when they are already stretched to their limits.” 

Mark added he thinks it’s inevitable that businesses will attempt to lower costs by halting recruitment drives and making redundancies due to the NIC rise, alongside increases to the National Living Wage, “only further damaging the economy”. 

“Businesses are realising that cost-cutting measures must go beyond CAPEX reductions and extend to operational efficiencies, workforce optimisation, and technology investments that improve productivity without increasing overheads.” 

Speaking after the Spring Statement, Tom Bradshaw, president of the NFU (which has tried and failed so far to negotiate with Government on agricultural IHT changes) said Britain’s food security is just as important as its fiscal security, calling the policies announced since Labour’s election a blow to farmers’ and growers’ confidence. 

“We want to work with the Government to deliver the foundations for food security, economic growth and environmental delivery and we have the blueprints to support this. We will continue to make the case for investment ahead of the comprehensive spending review,” he said.