Spring Statement – what does it mean for small businesses?

The government has delivered a Spring Statement announcing spending cuts and investment in infrastructure that’s expected to boost growth over the rest of Labour’s term in government.

We’ve gathered the important details for small businesses and the self-employed from Chancellor Rachel Reeves’ speech.

What happened in the Spring Statement?

Here are the key points from the Spring Statement for small businesses.

OBR growth forecasts

The OBR has cut its growth forecast for this year to one per cent, down from an expected two per cent in the last Budget.

However in response to Reeve’s planned changes, the OBR has increased growth forecasts for future years – 1.9 per cent in 2026, 1.8 per cent in 2027, 1.7 per cent in 2027, and 1.8 per cent in 2029.

The OBR did reveal that the average household is expected to be £500 a year better off under the Labour government.

Extensive welfare cuts

The government has already announced £5 billion in welfare cuts, created by changing the way disability allowances like Personal Independence Payments (Pip) are assessed. This will impact the 600,000 people with disabilities estimated to be self-employed in the UK.

In the Spring Statement Reeves did promise to invest £1 billion in personalised employment support to help get people back to work.

Investment in tax collection

Reeves hopes to raise an extra £1 billion by spending more money on tax collection. Her plan is to invest in HMRC’s capacity to crack down on tax avoidance and increase the number of people caught doing so by 20 per cent.

Getting Britain building

Reeves also announced that the government will be allocating £2 billion towards affordable housing next year. Over the course of the parliament, the government expects house building to hit a 40 year high, with 305,000 houses built a year, reaching a total of 1.3 million over the next five years.

In order to help with this plan and to tackle trades skill shortages, the government is also allocating £600 million to train the next generation of construction workers in the UK. This will include creating new technical excellence colleges.

Updates to inflation and interest rates

The latest inflation figures show that the cost of living will be rising more quickly than expected, averaging at 3.2 per cent this year according to the OBR, before dropping to 2.1 per cent in 2026.

High inflation means higher energy costs, wages, and price of goods and services, increasing costs for businesses compared to the prices they might be charging.

Explore some of the steps you can take to tackle rising inflation in our guide.

The Bank of England announced on 20 March that they’ll be keeping interest rates at 4.5 per cent after a cut in February.

Find out more about interest rates and how they could impact your business in our full guide.

Small businesses go without relief

A number of changes from the Autumn Budget 2024 are set to seriously impact small businesses from April, including higher employer National Insurance contributions and an increase of the national living wage.

The Spring Statement didn’t deliver the relief small business owners were hoping for, with the opposition claiming that “business confidence has been smashed in a million pieces.”

Respondents to a recent Simply Business survey of small business owners found that a quarter (24 per cent) are calling for the government to reverse the National Insurance hike, while 27 per cent have urged the Chancellor to simplify the tax process.

Many of them worry that they’ll need to close their businesses in response to increasing costs.

“Today’s Spring Statement will have disappointed the small business owners who tuned in with hope for support,” said Julie Fisher, UK CEO at Simply Business.

“Instead, they face the harsh reality of tax hikes set to take effect next week. In response, around half (43 per cent) of small businesses will be forced to raise their prices. Even more worrying are the one in five (18 per cent) SMEs fearing that they will cease trading within a year if economic conditions don’t improve – that would mean almost one million less businesses in the UK. The impact that these changes will have on our local communities and economy cannot be overstated.

“The Chancellor has made it clear that employment is central to delivering the UK’s much-needed growth, so the announced £600 million funding into the construction industry will be a welcome investment for firms across the country. This highlights the deep well of opportunity that lies within small businesses, with SMEs representing over half of employment in the private sector. However, in light of the imminent increasing tax burden, a quarter (24 per cent) of SMEs will cancel hiring plans.

“If we’re to tap into the employment opportunities that the small business sector can provide, we must listen to and fulfil the needs of SMEs. What’s good for small businesses is good for our economy. SMEs have consistently demonstrated that they can grow and innovate when given the right conditions. As it stands, these conditions are simply not in place.”

What is the Spring Statement?

While the government has committed to only one main fiscal event per year – with the next Budget taking place in the autumn – the Spring Statement contains an economic and fiscal forecast published by the Office for Budget Responsibility (OBR) and a statement to parliament from Chancellor Rachel Reeves.