Liam O'Doherty
Corporate Tax Partner
The Spring Statement (to Parliament) will take place on Wednesday 26 March.
The Chancellor must make two statements to Parliament each year about the progress of the economy based on and responding to economic forecasts produced by the Office of Budget responsibility. Historically, in recent years, this has resulted in a Budget statement in the spring and autumn, however, the Labour government have now committed to having just one Budget a year in late autumn, with a Spring Fiscal Statement. This is to try and bring in stability and simplicity for businesses, allowing more time for changes to be prepared for and made.
In the Autumn Budget, the Chancellor announces the main tax changes for the year ahead, and outlines the state of the economy and the latest predictions by the Office of Budget Responsibility (OBR). However, unless the forecasts drive is an immediate need to raise revenue, the Spring Statement for 2025 will not be used to announce tax changes.
It has not yet been announced, but in previous years most fiscal statements to Parliament are made at approximately 12:30pm, straight after the Prime Minister’s questions.
Budget speeches usually last about an hour, but if the OBR forecasts are uncontroversial, the 2025 speech may well be shorter. The longest ever speech was by William Ewart Gladstone in 1853 which lasted 4 hours and 45 minutes. The shortest speech was given by Benjamin Disraeli in 1867 and lasted 45 minutes.
The Chancellor of the Exchequer, Rachel Reeves will make the speech.
The Chancellor of the Exchequer Rachel Reeves will make her statement in the House of Commons.
The key metric will be whether the OBR predicts that the Chancellor will be able to keep to her own self-imposed fiscal rules over a five-year period. If the “fiscal headroom” predicted at the Autumn Budget 2024 falls to or below zero, the Chancellor will have to set out steps to balance the books either by cutting government spending in the five-year period or raising taxes. See the Economic Overview here.
All ministers have a red box for briefing papers. A red box has been used to carry the Chancellor’s speech from Downing Street to the House of Commons for over one hundred years, started by William Gladstone in 1860. Holding the red box up to the press in Downing Street is the classic image of Budget day in the UK. The word ‘Budget’ itself comes from a French word ‘bougette’, meaning little bag.
An Emergency Budget is unscheduled, and reacts to outside forces, and is often geared towards solving a particular crisis, like that of Autumn 2022.
Follow our coverage of the announcements here and what the Spring Statement means for you and your business.
