Reeves presented her statement yesterday, where she has squeezed the welfare budget further.
£6.4bn will be cut from health and disability benefits by 2029 to 2030.
The work capability assessment will be scrapped in 2028, which has been used to determine if someone is fit to work or not. Instead, the assessment will be replaced by the same test used for PIP eligibility.
Changes to Welfare and Unemployment Benefits
Labour will also introduce ‘Unemployment Insurance’ to replace Jobseeker’s Allowance and Employment and Support Allowance. This new scheme will be “time-limited” to provide better income protection during periods of unemployment for those with a recent work record.
It will be non-means tested, and the amount it pays will likely be decided by a person’s previous national insurance contributions.
Labour is also committing £1bn a year to support employment, health and skills to make the system more “pro-work”.
Impact on the Cost of Living and Tax Rises
Experts have predicted that the Spring Statement 2025 could further impact the cost of living negatively for the British public.
The IFS has reported that autumn tax rises could be on the horizon this autumn.
In addition, she plans to boost defence spending with a further £2.2bn for defence.
Real household disposable income per person is expected to grow by an average of around 0.5% a year, according to The Office Budget Responsibility.
Criticism and Support of the Spring Statement 2025
Charities and Labour MPs have criticised the statement, saying that it will impact the most vulnerable in society.
Conservatives have also said that the Spring Statement 2025 is a response to the “disastrous” Autumn Budget which saw taxes rise to £40bn.
Industry Experts React to the Spring Statement 2025
So, what do the manufacturing industry experts have to say?
Stephen Phipson, CEO of Make UK, said: “In the context of a challenging and, rapidly changing, economic and political environment the Chancellor is facing a difficult fiscal balancing act and, the unenviable situation of having to rob Peter to pay Paul.
“Industry will welcome and support the Chancellor’s focus on maintaining economic stability and increases in infrastructure and defence investment but, it is clear the Chancellor will continue to face difficult spending choices amid the likelihood that investment in defence and security will have to rise further given the scale of threats we face. UK manufacturers stand ready to support the government to scale up our defence manufacturing, a critical national priority.
“Looking ahead, all eyes will now be on Government bringing forward a comprehensive and fully funded modern, long-term industrial strategy which has advanced manufacturing at its heart. This must be aligned across Government with a defence industrial strategy as well as energy, trade and skills strategies to demonstrate to business and foreign investors that there is joined up thinking on how to grow UK manufacturing, the engine of the economy and the sector which will deliver our security and net zero future.”
Economic Landscape and SME Challenges Post Spring Statement 2025
Hamish Martin, Partner at LAVA Advisory Partners, said: "The Chancellor was true to her word that today's announcement would be more of an economic update than delivering a raft of tax reforms or spending commitments. For businesses, hopes of u-turns on previously-announced policies such as National Insurance hikes did not materialise, meaning no relief for the escalating costs that are creating headaches for many of the UK's 5.5 million SMEs.
"To help bolster public spending in the future, and to allow for greater defence spending, the Chancellor made clear her focus on scything government running costs. With a plan to reduce those costs by 15% by the end of this Parliament, it will be interesting to see if professional services firms are called upon to help the government restructure departments and deliver efficiency gains - there could be some major opportunities for consultancy firms if so.
"More broadly, the challenging economic landscape for SMEs - higher inflation, wages and borrowing costs - points towards a potential spike in M&A activity. The extremely modest forecasts for the UK economy could make life challenging for small companies, in turn opening the door to more consolidation across various industries. Whether it's private equity firms seeking new opportunities to inject capital they've raised and need to deploy, or larger firms targeting smaller competitors to acquire particular skills, IP or specialisms, we should expect players with stronger finances and bolder ambitions to remain active through M&A activity while others focus on survival."
