Commentary: Spring Budget 2025

"The UK's economic outlook is increasingly bleak.The tax burden is projected to reach 38.2% of GDP by 2029–30, surpassing post-World War II levels. Public sector net debt stood at 95.5% of GDP in February 2025, a level reminiscent of the early 1960s. Chancellor Rachel Reeves faces mounting pressure as government borrowing surged to £10.7 billion in February 2025, well above the £6.6 billion forecasted. This brings the year’s total borrowing to £132.2 billion, significantly higher than expected.

To address these fiscal challenges, Chancellor Reeves is expected to implement measures aimed at improving public sector efficiency and controlling spending. However, these efficiency improvements may alienate core Labour supporters.

While taxing the rich could generate revenue, it risks accelerating the exodus of high-net-worth individuals and skilled professionals seeking better opportunities abroad. As a result, the government may explore alternative revenue sources, such as restructuring property taxes to be more progressive and aligned with current property values. Proposals include replacing council tax with a proportional property tax, which could generate additional revenue while addressing regional disparities.

Overall, the Spring Statement is expected to focus on fiscal consolidation, public sector efficiency, and potential tax reforms in a tough economic environment.”