Alan Vallance, ICAEW Chief Executive, said:

“Today’s statement suggests there’s no spring break for business, with the economy downbeat, the OBR downgrading the UK’s GDP prospects and a suite of extra costs set to hit next week. Nevertheless, we’re pleased the Chancellor has listened to our calls for capital investment in infrastructure.

“The Chancellor is right that the world has changed and that we as a country have to adapt. But much of the sluggish growth since October has been self-inflicted after the Budget damaged the conditions for growth, which means continued low productivity levels and stagnant living standards.

“The Chancellor has essentially boxed herself in against her fiscal rules, and with little room for manoeuvre it’s vital she does not cut off any of her remaining levers for growth, so it’s positive that she did not axe capital spending. Notably, the OBR forecasts have overlooked the impact of the Employment Rights Bill, which our members have told us will reduce recruitment and responsible risk-taking in the pursuit of economic growth.

“It’s time for the Chancellor to sow the right seeds for the green shoots of growth to emerge. Sixty-one percent of ICAEW members polled said that investment in infrastructure is very important for enabling business growth, and a greater emphasis on unlocking private investment will kickstart economic growth and ensure the UK becomes the fastest-growing economy in the G7.” 

Alison Ring, ICAEW Director, Public Sector and Taxation, said:

“The UK’s public finances continue to be fragile, with the economy flatlining, rising debt interest, significant cost pressures, underperforming public services and local government on life support. Fortunately, though the OBR has brought down its forecasts for economic growth in 2025, prospects have improved for the rest of the forecast period. 

“As expected, the Chancellor was forced to cut back her spending plans to offset a worsening of the OBR’s forecasts for the public finances. The positive news was that she has put in more upfront investment in the medium-term to transform public services, as we have called for.

"What is clear is that the headroom the Chancellor gave herself at the time of the Autumn Budget was not big enough to prevent lower growth and spending pressures from pushing her plans off course. While she will be hoping that the minimum wage uplift and planned public investment will boost the economy once the April tax rises are out of the way, she is likely to need to find other ways of building up the resilience of the public finances to avoid a similar situation occurring this time next year.”

Frank Haskew, ICAEW, Head of Taxation Strategy, said:

“These changes significantly increase the penalties for late payment of VAT and MTD income tax, making timely payment more critical than ever for businesses.

“Taxpayers who are worried should focus on getting a time to pay arrangement in place as soon as it is clear they cannot pay in full. 

“It is important that businesses are made aware of the changes, especially as they apply from 1 April 2025 for VAT, which is less than a week away.”

ENDS

Notes to editors: