Spring Statement 2025 Analysis

In this video, James Andrews, Partner and Director of Investment Management at Redmayne Bentley, discusses the 2025 Spring Statement and the key takeaways from it. A transcript of this video can be found below.



How might the Spring Statement impact investors?
So, clearly the headlines from the Spring Forecast were around the welfare cuts but, for investors, I think the focus is on the spending announcements. So, that premise of becoming a defence industrial superpower is really interesting from a UK investor perspective. The £2.2bn in spend over the next financial year is, really, super positive for the likes of BAE [Systems], Babcock, Rolls Royce and Chemring, etc, and notable was the UK-centric message around this. It talked about opening up contracts to small and medium-sized enterprises in the UK. This is an industrial strategy that should create jobs in the regions. This is not a London-centric package of spend, this is really creating jobs in the regions so it should be positive for growth going forward.

Also key to the statement’s projections over the medium term were those house building targets and, to go along with those, they announced the £2bn spend on social housing almost immediately and they also talked about the planning reforms. The planning reforms have been given more substance by the OBR (Office for Budget Responsibility) after apportioning growth impact having now seen the details, so that is good news and potentially positive for the likes of UK house builders including Persimmon, Taylor Wimpey and Barratt Redrow, etc. I should point out, however, that the share prices have been under pressure as they have been voicing concern around greater cost pressures that pretty much all industries have been recently, so it is not a clear-cut story there in house building but, overall, positive spending announcements.

Are there any potential challenges on the horizon?
In terms of the potential challenges on the horizon, well, by sticking to her fiscal rules the markets have, initially at least, reacted neutrally to the statement and borrowing costs have remained stable, so that is effectively a positive, but it still remains a challenge. There isn’t much headroom in the numbers and any shocks are likely to mean further spending cuts or the need for coming back in the autumn for tax rises. But the short-term downgrade in growth is obviously a negative for short-term UK plc but, as I said, I think in terms of the positive growth further out I think they do offer a ray of hope and all eyes are going to be on that execution in terms of the defence housebuilding spending as the UK looks to reignite growth and relieve the pressure on those public finances.

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The information and views expressed in this video were correct at the time of recording on 26^th March 2025 but may have changed at the point of viewing.

This communication is for information only and does not constitute a recommendation to buy or sell the shares of the companies mentioned.

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