The UK Spring Statement Impacted YOU! (Including mortgage rate predictions)

Rachel ree has just delivered the 2025 spring statement and although we had no surprise tax changes H there were some significant developments that I want to make you aware of the OB have today revised down our growth forecast for 20125 from 2% in the Autumn to 1% today including a surprise 4.1 billion pound deficit after the 40 billion pound black hole that we previously had before we dive into this video I want to just make you aware that this video is not intended to be political in any way I'm purely sharing the analysis first let's discuss the economic Outlook the office for Budget responsibility the obr gave us some sober news today harving the UK's growth forecast for 2025 from 2% to just 1% chancer Rachel re didn't even sugarcoat this when saying I'm not satisfied with the these numbers the OB points to two key factors for this cut number one is structural weaknesses particularly in productivity and number two is cyclical factors like higher interest rates increased gas prices and global economic uncertainty although it's not all doom and gloom the obr does project growth to improve in the coming years as you can see on screen now in 20126 they're predicting a 1.9% increase in 2027 this is 1 .8% for 2028 it's 1.7 and finally in 2029 it's 1.8% next let's discuss inflation and interest rates inflation does remain a concern with the OB forecasting an average of 3.2% this year however they do expect it to fall to 2.1% in 2026 and then hit the bank of England's 2% Target from 202 7 onwards in addition to inflation mortgage rates have also been negatively impacted for borrowers unfortunately the OB does predict that mortgage rates will rise from 3.7% in 2024 to 4.7% in 2028 and then stay there in 2029 this is higher than previously forecast therefore if you are a homeowner or looking to buy a house you might want to consider this in your financial planning next let's discuss the tax burden to individuals now here's a statistic that might raise some eyebrows the UK's tax burden is set to reach 37.7% of GDP by 2027 2028 this is the highest level since World War II while the chancer didn't announce any new tax increases in the statement previous measures are contributing to this High tax burden these include Frozen income tax thresholds until 2028 and it increases in the employer National Insurance contributions from 13.8% to 15% St in April 2025 it is worth noting that while the ni increases is officially a tax on employers the OB does estimate that 76% of this cost will ultimately be passed on to workers through lower real wages next let's discuss public finances and spend it the chancer has a she's walking a tight rate between fiscal responsibility and investing for growth without the measures announcing the statement the government was facing a deficit of 4.1 billion P by 2029 2030 however re claims that her interventions will turn this around projecting a surplus of 6 billion in 2027 to 2028 7.1 billion in 2028 to 29 and 9.9 billion in 2029 to 30 to achieve this she's told us that some tough decisions have been made day-to-day spending growth has reduced from 1.3% to 1.2% per year above inflation and departments outside of health and defense could face cuts of up to 11% of their budgets now let's discuss the changes announced today first we have welfare reforms one of the most debated aspects of this statement is welfare reform the changes are expected to save £ 4.8 billion with a net saving of 3.4 billion pound after accounting for employment support and implementation costs key changes include the Universal Credit standard allowance increasing from £92 to £16 per week by 2029 2030 and the Universal Credit Health element for new claimants cut by 50% and then Frozen the chance of defend under these changes say we believe that if you can work you should work but if you can't work you should be properly supported however the government's own assessment suggests that these reforms could push 250,000 people including 50,000 children into poverty by 2030 second we have changes to defense and National Security in response to the Global Security challenges the government is committed to increasing defense spending to two .5% of GDP by April 2025 this includes an additional 2.2 billion for the ministry of Defense next year some of the key initiatives behind this include 10% of the defense budget equipment dedicated to novel Technologies like drones and AI a400 million protected budget for UK defense Innovation regeneration of the Portsmith Naval base and finally £200 million to support Barrow a town Central to the UK's nuclear nuclear security this increased spending will partially be funded by reducing overseas aid to 0.3% of gross national income third we have housing and planning reforms the chance is betting big on housing and planning reforms to drive economic growth the OB forecasts that these reforms will result in UK house building reaching a 40-year high of 305,000 homes annually by 2029 to 30 an extra 1.3 million homes built between 2025 to 2030 a permanent increase in Real GDP of 0.2% by 2030 which will be worth around 6.8 billion and then 0.4% within a decade worth around 15.1 billion to support this the government is investing2 billion p in Social and affordable homes next year and over 600 million to train 60,000 more construction workers fourth we have in increases to civil service and government efficiency the Chan announce a £3.25 billion pound transformation fund to help reduce government running costs this includes a voluntary exit scheme that could see up to 50,000 civil jobs cut the aim is to make the state leaner and more agile whilst also delivering more resources to the front lines what does this mean for you first we've got mortgage rates if you're home home owner or you're looking to buy be prepared for potentially High mortgage payments in the coming years two we've got taxes whil no increases were announced the overal tax burden is set to reach historical highs this could impact your take-home pay and your overall financial planning third we've got the cost of living the Chan is claimed that households will be on average over 500 a year better off under the current projections however with inflation still above Target and potential impacts from welfare reforms many families may still feel the pinch fourth we've got the housing market the focus on increasing housing Supply could potentially ease the pressure on housing prices in the long term but this remains to be seen fifth we've got the job market increased defense spending and focus on construction could create opportunities in these sectors however public sector job Cuts might offset some of these gains number six we've got public services with tight controls on day-to-day spending growth you might see impacts on the quality or the availability of some Public Services it can be said that the spring statement 2025 reflects a government trying to navigate challenging economic Waters while the immediate Outlook appears tough with half growth forecast for 2025 there is cautious optimism for the medium term the chance is betting on planning reforms defense Investments and efficiency measures to drive growth whilst maintaining fiscal discipline however with a record high tax burden and significant welfare reforms the impact on households and the broader economy is yet to be seen as we move towards the full spending review in June and the Autumn budget we'll be keeping a close eye on how these measures play out in practice will the planning reforms deliver the promised growth boost can the welfare system support those who need it most whilst also encouraging work and how will households cope with the ongoing cost of living pressures these are the questions we be asking in the months ahead for now it's clear that while the government is aiming for stability and growth many middleclass Britain may need to brace with some Financial challenges in the short term that's all for our breakdown of the spring statement 2025 thanks for watching and don't forget to comment and subscribe for more economic analysis going forward until next time