Spring Statement Summary

Growth had been slower and interest rates and inflation higher than the Office for Budget Responsibility (OBR) projected last October, meaning that her main fiscal target was liable to be missed. Despite much press speculation, fresh tax increases were ruled out until the next full budget, so her focus was turned on controversial spending cuts.

A large slice of the pain was borne by the welfare budget, with well-trailed reductions to Personal Independence Payments (PIPs) and the health-related element of Universal Credit.

The biggest takeaway for savers and investors was that ISA and pension allowances were left untouched. What may happen in the Autumn Budget is still to be seen, but for now, it’s good news.

There were also, intentionally, no big surprises in the statement, so financial markets initially lost ground but then rebounded with a tentative feeling of optimism for long term growth.

Among the key headline items were:

• Cuts to sickness and disability benefits producing projected net savings of £4.8 billion a year by 2029/30.
• Tax administrative reforms aimed at raising over £1 billion a year;
• A £3.25 billion Transformation Fund to improve public sector productivity.
• Conformation that the Treasury is “looking at options for reforms to Individual Savings Accounts”, with emphasis on the balance between cash and equities; and
• A projection from the OBR that growth in 2025 would be 1% - half the level projected last October – but that each of the subsequent four years would see higher growth than last Autumn’s.