Rachel Reeves has delivered her Spring Statement to Parliament, with billions of pounds’ worth of cuts the headline announcement.
The Chancellor’s statement is not a formal Budget – Labour pledged to deliver only one ‘fiscal event’ per year – but rather intended as an update on the Budget delivered last autumn.
Reeves told Parliament that she had decided to introduce a string of cuts nonetheless as “the world has changed” – with Kemi Badenoch, leader of the Conservatives, pouncing to brand the Statement an “emergency Budget” and Shadow Chancellor Mel Stride accusing Reeves of “tanking the economy”.
Reeves confirmed that “final adjustments” had been made to plans for disability benefit cuts, announced last week, with the universal credit standard allowance increasing from £92 per week in 2025-6 to £106 by 2029-30 and universal credit health elements cut to new claimants by around 50% and then frozen. She says the welfare changes will save £4.8bn.
There were also key announcements regarding reducing the size of the State overall via cuts to the civil service, further measures to combat tax evasion and defence.
So how did the tech and business sectors react to the Spring Statement?
Downgraded growth forecast
The Office for Budget Responsibility has halved its forecast for UK growth this year from 2% to 1% – but says growth in the coming years will be faster than expected by the OBR last autumn.
It anticipates growth in 2026 to be 1.9%, up from the 1.8% forecast in October’s Budget; 1.8% in 2027, up from 1.5%; 1.7% in 2028, up from 1.5%; and 1.8% in 2029, up from 1.6%.
Matthew Allen, Lecturer in Economics and macroeconomic expert at the University of Salford, said the Statement “offered little in the way of optimism for the economy”.
He said the downgrading of the growth forecast for 2025 revealed a fiscal shortfall of over £15bn, with borrowing costs on the rise and the previously anticipated £9.9bn headroom wiped out.
“One of the most contentious domestic issues is the impending rise in employer National Insurance Contributions in April, which businesses are already anticipating by reducing overheads and, in some cases, cutting jobs. This move could hit those already struggling to make ends meet, amplifying financial insecurity,” he added.
“While inflation has reportedly fallen to 2.8%, offering temporary relief from price pressures, experts warn that this could be misleading given the ongoing risks from trade disruptions and increased employer costs.”
Amy Knight (above), small business expert at NerdWallet UK, said the NIC hike could make female business owners £34,000 worse off.
“With UK businesses paying more National Insurance for each employee they hire from 1st April, growing a team becomes less viable without significant funding.
“Financial backing is statistically much easier to get if you’re a man. Only 2% of VC funding goes to all-female founding teams. Women face discrimination and are offered smaller business loans. Consequently, more than three-quarters of women entrepreneurs end up self-funding their business.
“Since staff costs represent a huge proportion of business outgoings, the increase in NICs, on top of the National Living Wage, will hit these female-led businesses particularly hard.”
Charlie Precious, principal at tax services firm Ryan, said the Statement was largely what the Chancellor promised – a non-fiscal event. “In this case, no news is good news. After a period of constant change, many will welcome a sense of stability,” he continued.
“However, the significant downgrade in the UK’s OBR growth forecast from 2% to 1% will understandably raise alarm bells for many businesses already navigating a challenging economic climate.
“Now more than ever, companies must ensure they’re not leaving money on the table, only paying exactly what they should be paying. That means utilising every available tax relief and incentive, such as full capital expensing and R&D tax relief, while also embracing the latest tax technology tools to ensure accuracy, compliance, and efficiency. These tools can make a huge difference in managing costs in a slower-growth environment.”
No tax rises – but increased crackdown
Reeves, who controversially hit businesses with extra taxes in the autumn Budget, did not introduce further tax rises. However new measures will be introduced to crack down on tax avoidance and evasion.
She told the Commons: “Today, I go further by continuing our investment in cutting-edge technology, investing in HMRC’s capacity to crack down on tax avoidance and setting out plans to increase the number of tax fraudsters charged each year by 20%.
“These changes raise a further £1bn, taking total revenue raised from reducing tax evasion under this Government to £7.5bn.”
Michelle Sloane, partner at global law firm RPC, said the announcement was “unsurprising”.
“Last month the Public Accounts Committee issuing a scathing report, calling for the government to have a clear strategy to tackle tax evasion and increased powers for public bodies to address fraud, given they considered the £5.5bn which HMRC estimated was lost to tax evasion in 2022-2023 could be a significant underestimate.
“HMRC have significant powers at its disposal to tackle tax evasion; however, it has not been making full use of these powers. HMRC criminal prosecutions for tax evasion has decreased by more than 50% from 749 cases in 2018/19, to only 344 in 2023/24.
“This reduction raises serious concerns about the diminishing deterrent effect of HMRC’s enforcement actions. It will be important for HMRC to set specific objectives and measurable targets to achieve its stated aims as its current powers and resources are not being used effectively.”
Emma Jones (above), CBE, CEO and founder of small business support platform and membership community Enterprise Nation, said “cranking up penalties for tax evasion in our view does not reflect the good intent of the self-starters”.
She explained: “Investment in getting people back into work is commendable, but we have to ask where will all these new jobs come from?
“There were positives – increases in capital spending on infrastructure and defence will provide some opportunities for small businesses in a raft of new procurement moves – these have been recently made more accessible as a result of the Procurement Act.
“Confirming that Making Tax Digital self-assessments will be rolled out to firms with turnover above £20,000 in 2028 is good news, but it comes with a pledge to increase VAT late payment penalties on those using the scheme from April.
“Entrepreneurs are workers as well, powering and creating 60% of all employment – and for them the tone of today’s Statement was downbeat. Cheerleaders required.”
Theo Chatha, CFO at Bibby Financial Services, added: “The Chancellor’s Spring Statement will be a huge disappointment to the UK’s small- and medium-sized enterprises. We know 87% of SME business leaders are eager to invest and nearly half were deferring major investment decisions until after today’s Statement.
“Off the back of an unpopular Autumn Budget and with increased employer National Insurance contributions and business rates set to rise, today’s statement was a missed opportunity to support the UK’s SMEs.”
Public services
The civil service will look to axe 10,000 ‘back office’ jobs, many of which Reeves says can be done by technology, to free up £2bn which can then be used for “front line” services.
Julian Mulhare, MD, EMEA at tech and AI consultancy Searce, said the government’s commitment to tackling legacy tech and ramping up tech investment is a positive step – especially for public sector organisations “still bogged down by outdated systems”.
He continued: “This offers valuable lessons for businesses facing similar challenges. But tech alone won’t solve the problem. Too many organisations still plan in five-year cycles that can’t keep up with innovation, or dive in without clear goals.
“Strategic investment is only half the battle; execution matters more. Real transformation starts with process first, technology second- focusing on scalable, interoperable solutions that support how people actually work.”
Rob Woodstock (above), managing director of tech consultancy Slalom, welcomed the Government’s increased messaging around the potential of AI since the autumn Budget.
“While it is a step in the right direction, the government will need to ‘walk the walk’ when supporting AI adoption across the public and private sectors.
“For instance, Reeves’ plans to cut civil service running costs by £2.2bn – 15% – could cause widespread scaremongering around job losses. Instead, the focus needs to be around how AI offers the opportunity to radically shake up the game and free up time for higher value activities and tasks,” he said.
“Ultimately, AI and digital services can make civil services more efficient, cut costs without harming the quality of services and free up staff from manual and repetitive tasks – but the success of this plan hinges on smart implementation and structural reform.
“From the get-go, AI needs to be deployed in a human-centric way that focuses on enabling people, protecting data, and foregrounding security.
“Rather than focusing on workforce reductions, the narrative around AI needs to centre on its potential to create jobs, enhance productivity and reshape the workforce – much like the internet did in the 1990s or the industrial revolution did in the 18th Century.”
Steve King, CEO at Dragonfly AI, said Reeves is “right to include investment in cutting-edge AI tools to improve public services in the UK” but said he was especially hopeful for an impact within the NHS.
Defence
Reeves also confirmed that the Government met its pledge to spend 2.5% of GDP on defence by 2027, while the Ministry of Defence will get an additional £2.2bn next year.
She said: “We will spend a minimum of 10% of the Ministry of Defence’s equipment budget on novel technologies including drones and AI-enabled technology.
“Driving forward advanced manufacturing production in places like Glasgow, Derby and Newport, creating demand for highly-skilled engineers and scientists, and delivering new business opportunities for UK tech firms and startups.”
Volodymyr Levykin, CEO and founder at space firm Skyrora, said the new defence innovation fund and commitment to the largest defence spending increase since the end of the Cold War “shows that now is the time for the UK to tap into the strength of its space sector to develop sovereign defence capabilities”.
“If it is to truly become a defence industrial superpower… any investment into space catalyses tech development, so investing more in defence – read space – speeds up innovation and the production process.
“Space is the great enabler between industries and the first battlefield for effective defence strategies. If the UK invests more in sovereign launch capabilities, we would not depend on third parties for satellite-based activities such as intelligence, reconnaissance and communications.
“Ultimately, more investment in defence should automatically mean more investment in space. In turn, we will foster greater innovation, boost the economy, and keep the nation safe.”