After less than nine months in office, the pressure is already on Labour. Today’s Spring Statement, or “Emergency Budget” in the words of the Conservatives, took an axe to public spending to restore the UK’s worsening fiscal position. 

Growth is down while Government borrowing has increased. Reeves said the 2025 growth estimate for the UK has been halved to 1%. Meanwhile, she announced the Government’s welfare cuts will amount to £3.4bn. 

Reeves also announced she will bring forward £3.25bn of investment for public service reform. Some of which will be used to invest in AI tools and technology improvements to help deliver £3.5bn of day-to-day savings by 2029-30.  

Reeves has blamed global economic headwinds and geopolitical tensions to justify the statement and cuts. 

Global events have undoubtedly impacted the UK economy and Government finances. However, the Chancellor must shoulder some responsibility after introducing £40bn in tax rises in the Autumn Budget, including a hike to employer’s National Insurance. 

As others have pointed out, government bond yields increased before Trump’s inauguration in January. 

So, what does this mean for UK businesses and those operating here? 

First, and most immediately, we may see resignations among the Government’s front bench in response to the welfare cuts. Depending on who and how many resign, it may prompt a more significant reshuffle, which has been rumoured. This may mean building new relationships and resetting the agenda. 

Second, expect more difficult decisions ahead of the Budget this Autumn. Economic pessimism remains high, and fiscal pressures continue to mount. The Chancellor is under pressure to change the narrative and deliver. We may see a new Chancellor before the next Budget if she doesn’t. This may prompt a renewed focus on growth and how to achieve it. 

Relatedly, the Labour Government must improve its economic narrative. It must articulate a clear vision for growth and, most importantly, will need to work with UK businesses to achieve that. 

When engaging with the Government, businesses must make a case for why and how their ask can help turbo-charge growth. This offers an opportunity but a risk. Those firms that can articulate how they can help will get a hearing, while those that fail to make the connection will struggle.

 The Spring Statement today delivered what most expected. But we can expect more change ahead.