The Chancellor delivered her Spring Statement on 26 March and as expected, growth forecasts for 2025 have been downgraded by the Office for Budget Responsibility (OBR). She also highlighted the important role that housebuilding will play in boosting economic growth. The main points to note from the Statement include:
- The OBR revised down its UK growth forecast to 1% for 2025. It was previously 2%.
- Planning reforms will boost national income by 0.2% by 2029/30, providing an additional £6.3billion in the economy, and by 0.4% of GDP within the next 10 years, equating to £15.1billion in the economy.
- The revised aim is now to build 1.3 million homes over the next 5 years rather than the previously stated 1.5 million homes.
- The Chancellor reiterated a previous announcement by the Education secretary that more than £600million will be available to train up 60,000 construction workers by 2029, including the development of 10 new technical excellence colleges across every region of the country.
- The Chancellor has outlined a target to reduce administration costs of the government by 15% by 2030. About 10,000 civil service jobs are expected to go, including staff working in HR, policy advice, communications & office management.
- The Chancellors fiscal rules set out in the October budget are ‘non-negotiable’. This means:
- The budget will be balanced budget by 2029/30, so day to day spending is met by tax receipts
- Debt will fall by the end of the forecast period to 2029/30
Angus Hannah, Economics Analyst at Pegasus Group commented; “While disappointing, the OBR’s reduction in its 2025 growth forecasts for the UK was not unexpected. To grow the economy, the Government now needs to deliver on its planning reforms in order to significantly boost housing delivery and create much needed economic growth. Alongside planning reform, the Government’s commitment to increasing the construction workforce will be critical if we are ever to see any improvement in the housing crisis.“