Growth estimates for the UK in 2025 have been halved to 1% by the Office for Budget Responsibility (OBR), the Chancellor of the Exchequer, Rachel Reeves, has announced in the Spring Statement.

The OBR stated that it has lowered the estimates for the year as a result of "a more challenging and uncertain outlook".

In the Government’s Spring Statement, the Chancellor said that she is "not satisfied with these numbers" but stated that the Government is "serious about taking the action needed" to grow the economy.

Despite the estimate reduction, it is still more optimistic than the Bank of England’s estimate that the economy will grow by 0.75% during 2025.

The Chancellor said that steps taken today will restore the country’s "headroom" in full, meaning that the Government is set to move from a deficit of £36.1bn in 2025/26 to a surplus of £9.9bn by 2029/30, taking the Budget to a surplus two years earlier than expected.

Furthermore, the Government said that there would be no tax changes in the Spring Statement, meaning that measures introduced in the Autumn Budget, such as the increase in employers' National Insurance contributions, remain in place.

However, Reeves did pledge to a further crackdown on tax evasion.

As a result, the Government has announced plans to increase the number of "tax fraudsters" charged by 20% each year.

These changes are set to take the total raised from reducing tax evasion to £7.5bn, in figures verified by the OBR.

Head of money and markets at Hargreaves Lansdown, Susannah Streeter, said: "There were no big surprises in this statement, and that’s exactly what the Chancellor intended. Stability is right at the cornerstone of the government’s agenda, and she appears to have done the trick of not unnerving investors further. She has made it clear she’s not for turning, and won’t break her fiscal rules. It’s still not going to be easy going forward despite the wiggle room in the years to come the OBR has forecast.

"The UK is not blessed with lower debt to GDP levels like Germany, which has enabled the country into lifting its borrowing brake. With eyes trained on investment to propel longer-term growth, the government will still have limited room for manoeuvre to deal with incoming trade disruption. The hope is that UK will still be seen as a steady, if sluggish, ship in the storm brewing amid the threat of further tariffs from the US."

In the statement, Reeves also said that the Government’s inflation target of 2% will still be reached by 2027, after it was announced that CPI inflation dropped to 2.8% in February.

As part of the OBR's projections, the non-departmental public body increased its estimates in inheritance tax (IHT) receipts collected to £66.89bn between 2024/25 and 2029/30.

This is an increase of £2.44bn from previous estimates following the Autumn Budget.

Director a Just Group, Stephen Lowe, stated: "The OBR’s forecasts once more uprated the forecasted IHT take and now estimate that the levy will raise an additional £2.44bn by the end of the decade.

"Frozen thresholds and rising asset prices have long been increasing the IHT haul and from next month the reforms announced at the Autumn Budget will be accelerating this trend.

"With approximately one in 10 (9.7%) deaths forecast to incur IHT on the estate by 2029-30, it is clear that the tax is no longer restricted to the very wealthy and is beginning to take a bigger bite of Middle Britain’s wealth."

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