The Spring Statement may have a significant impact on your personal finances, with changes to benefits, living standards, and jobs. Find out how today’s announcement could affect you.
Three ways today’s announcement could affect you and your money
If you’re concerned about how the Spring Statement will impact your finances, here are three key areas to consider.
The Spring Statement is a key economic document published by HM Treasury in the United Kingdom.
It is typically released in March, alongside the Budget, to update lawmakers and the public on the government's fiscal policy.
The statement provides an overview of the UK's economic performance, outlines tax changes, and sets out future spending plans.
Key areas covered include taxation, public finance, and economic growth.
The Spring Statement aims to provide a mid-year review of the government's financial strategy.
1. Benefit Changes
The changes to the benefits system announced last week may have a significant effect on those receiving certain types of support. Some 370,000 people are expected to lose their entitlement altogether, with an average loss of £4,500 per year. This includes individuals claiming Personal Independence Payments who will not qualify for the reduced amount.
Benefit changes refer to modifications made to existing benefits, such as insurance policies, employee perks, or government assistance programs.
These changes can be initiated by employers, governments, or organizations to adapt to changing circumstances, reduce costs, or improve overall well-being.
Key drivers of benefit changes include shifting workforce demographics, technological advancements, and evolving societal norms.
However, some families on Universal Credit may benefit from the changes. A total of 3.8 million families can expect an average increase of £420 per year after taking into account inflation. It’s essential to note that these changes are part of a broader welfare reform package, which also includes a reduction in the standard allowance for Universal Credit and a freeze on the health element.
2. Living Standards and Household Bills
The Spring Statement marks the beginning of a period where household bills will rise. From April, you can expect to pay more for water, energy, and council tax. However, there is some good news: if you’re over 21 and on the minimum wage, your hourly rate will increase to £12.21 from £11.44.
Despite this, the rising cost of living has pushed many individuals to their financial limits. Inflation is expected to average 3.2% this year, before falling to 2.1% in 2026 and then 2% from 2027. This means interest rates are likely to remain higher than previously thought.
However, there is some positive news on the horizon. Real household disposable income is expected to rise by just over 2% a year on average between now and 2030. This translates to an average increase of £500 per year by 2030, although this is relatively small compared to historical standards.
Economic growth refers to an increase in a country's production of goods and services over time.
It is measured by the Gross Domestic Product (GDP) growth rate, which indicates the percentage change in GDP from one quarter or year to another.
Factors influencing economic growth include investment in infrastructure, education, and research, as well as government policies and international trade.
A sustained economic growth rate can lead to improved living standards, increased employment opportunities, and enhanced global competitiveness.
3. Jobs and Services
Forecasts about the general state of the economy will influence decisions made by the chancellor, which could have a direct impact on your job and services. Official forecasts have been reduced from 2% to 1% for this year, but are expected to increase in subsequent years due to the government’s housebuilding programme.
A spending review in June will outline how much each government department has to spend, which could lead to job cuts or increased costs for services you use. On the other hand, investment by the government in areas like defence projects could create new jobs.
Overall, it’s essential to stay informed about the Spring Statement and its potential impact on your finances. While some changes may have a negative effect, others may bring benefits or improvements to living standards.
