Chancellor Rachel Reeves took to the Commons today with a Spring Statement that was less ‘refresh and renew’ and more ‘patch and preserve’. The standout? The UK’s 2025 growth forecast has been chopped in half — now sitting at 1% instead of the previously projected 2%, thanks to a mix of domestic fiscal tightening and a jittery global outlook.
Still, it’s not all gloom. The Office for Budget Responsibility (OBR) has upgraded longer-term growth forecasts off the back of Labour’s planning reform agenda, estimating a cumulative boost of £15bn over the next decade. That’s a decent tailwind, though the path there is paved with some sharp adjustments — particularly in welfare spending.
Reeves confirmed an additional £4.8bn in welfare savings, with changes hitting Universal Credit and disability-related payments. These moves shore up the Treasury’s fiscal rulebook, which Reeves says will be met two years ahead of schedule — no small feat given the headwinds.
Elsewhere, defence spending is climbing to 2.5% of GDP by 2027, with a £2.2bn boost kicking in next year. Overseas aid takes the hit, down to 0.3% of gross national income. The government is also cracking down harder on tax evasion, aiming to raise another £1bn in the process.
The Big Picture
The market will likely view this as a cautious, rules-first Statement — less about expansion, more about restoration. There’s little immediate relief for consumers or investors, but the forecast return to a £10bn surplus by 2029/30 does offer some macro reassurance.
Big picture: short-term pain, long-term alignment. For investors, it’s a signal to stay defensive in the near term — especially with inflation now expected to tick up to 3.2% before easing from 2026. Structural bets on infrastructure, defence tech, and UK-based innovation could pay off longer term, particularly if the growth narrative materialises. In the meantime, income stability and inflation resilience remain the priorities.
What The 2025 Spring Budget Means For UK Expats
If you’re living abroad, this isn’t just Westminster noise. The ripple effects could shape everything from your pension planning to your tax exposure. First up, the squeeze on welfare spending — particularly cuts to disability benefits and Universal Credit — won’t apply evenly across the UK, with Scotland and Northern Ireland on separate systems in some areas. But the overall message is clear: eligibility’s tightening. If you’ve still got ties to UK benefits or plan to return, it’s worth reviewing what support may still be on the table.
For British expats holding assets or pensions in the UK, the government’s renewed commitment to fiscal rules is a double-edged sword. On the one hand, stable finances could help preserve sterling’s strength — good news if you’re living off GBP income in a foreign currency. On the other, no major tax cuts are on the horizon, and the tightening may limit incentives or reliefs for UK-based investments. That said, the surplus target and falling debt ratio are likely to appeal to markets, which could calm volatility — welcome news for portfolio planning.
And while there’s no immediate movement on non-dom status, tax evasion crackdowns are ramping up. Expect more scrutiny of overseas income and complex cross-border arrangements — especially for those still deemed UK-domiciled for tax purposes.
In short: if you’re an expat with UK interests, now’s the time for a portfolio health check. Look at currency exposure, tax efficiency, and whether your income strategy still stacks up under a slower growth, tighter-spending regime. The UK’s playing the long game — make sure your plans are too.
Planning Ahead For Financial Health
The dust may take time to settle, but one thing’s certain — this isn’t a one-off course correction. It’s the start of a long-haul shift in how the UK manages its finances. For investors, expats, and anyone with financial ties to the UK, the coming years will bring both headwinds and windows of opportunity.
At Lawsons Wealth, we’re here to help you make sense of it all. Whether that means adjusting your strategy to protect against inflation, rebalancing your portfolio for long-term growth, or simply understanding what these policy changes mean for your wealth — we’ll guide you through it with clarity, foresight, and a plan that puts your goals first.
