The Spring Statement is a chance for the government to update on economic plans alongside the latest figures from the Office for Budget Responsibility (OBR). On 3 March, Chancellor Rachel Reeves shared the latest on inflation, spending, and growth.
While the government made clear that this wouldn’t be a moment for new tax policies, we did get an indication on future focus areas for the UK economy. She promised more to come on growth, harnessing AI, and tackling youth unemployment.
Find out how the spring forecast affects your money if you’re self-employed or run a small business. And read the latest reactions from industry and expert commenters.
What is the Spring Statement?
The Spring Statement is one of two moments in the year where the chancellor updates parliament on spending plans and the OBR publishes an economic forecast.
After successive Budgets and ‘mini Budgets’ from different governments, Labour committed to only one key fiscal event in the year – the Autumn Budget. And in the lead up to today’s statement, Reeves has made clear that this would be without fanfare and just a ‘forecast’.
What do small businesses need to know?
Here are the main points from the spring forecast that the self-employed and small businesses need to know.
OBR growth forecasts
The OBR has cut its growth forecast for this year to 1.1 per cent.
However, in response to Reeve’s planned changes, the OBR has increased growth forecasts for future years – 1.6 per cent in 2027, 1.6 per cent in 2028, 1.5 per cent in 2029 and 1.5 per cent in 2030.
The chancellor added that the average household is expected to be £1,000 a year better off by the next election (after accounting for inflation).
What about energy bills?
Labour has pledged to cut household energy bills by £300 a year by 2030, and Reeves reminded MPs in her forecast that energy bills are to be cut by £150 in April.
Ofgem (the independent energy regulator) has already set a new energy price cap for households, which will see a cut by seven per cent in April.
However, this doesn’t take into account the hike in gas and oil prices over the past few days. And geopolitical risks could mean the cost of energy could go back up when a new price cap is set for three months from July.
Business rates relief – funding plans
While no new measures were announced regarding business rates, the OBR forecast did cover how the latest relief package will be funded.
Pubs and music venues in England are getting a £300 million support package, with a 15 per cent business rates discount for 2026-27 and rates frozen for two further tax years. This is funded by new standard rates, a reduction in relief for retail, hospitality, and leisure businesses, and inflation.
Updates to inflation and interest rates
Inflation is set to fall from 3.4 per cent in 2025 to 2.3 per cent in 2026, according to the OBR. It’s then projected to fall again to 2 per cent from 2027.
Reeves says this shows their plan “is the right one” and means they’ll meet the target of bringing UK inflation down to two per cent.
The Bank of England announced on 5 February that the base rate will hold at 3.75 per cent. This is a measure used to help bring down inflation as it can reduce spending in the economy.
However, these forecasts were written before the current conflict in the Middle East.
Fuel duty freeze
Fuel duty is to remain frozen at 5p for every litre of fuel until 31 August 2026 – a measure that was announced in the 2025 Autumn Budget.
The government has been under pressure in recent days to address concerns about rising fuel prices. However, nothing was mentioned in the chancellor’s statement.
Income tax freeze
The income tax and National Insurance rates are to remain frozen until April 2031. This was confirmed during the Autumn Budget in November.
Employment Rights Act
The Employment Rights Act covers major reforms from April, including statutory sick pay, paternity leave, and zero-hours contracts.
However, this wasn’t included in Reeves’ statement or OBR forecast. The OBR said this is because “the economic impact is still very dependent on the outcome of forthcoming consultations and details to be confirmed in secondary legislation”.
Small businesses are absorbing costs
A number of changes from the Autumn Budget 2025 are set to seriously impact small businesses from April, including higher business rates and an increase to the national minimum wage.
The spring forecast was the non-event it had been billed as, and business owners are left wondering how much more they can be squeezed.
Respondents to a recent Simply Business survey of small business owners found that 82 per cent of small businesses have seen operating costs rise in the past 12 months, yet only 12 per cent are increasing their prices for customers.
Many of them worry that they’ll need to close their businesses if the issues they face aren’t addressed.
Tax burden at a ‘century-long high’
Julie Fisher, UK CEO at Simply Business, said: “The tax burden on businesses is at a century-long high, compounded by rising energy and supply costs. Our data shows that 82% of small business owners saw costs surge over the past year. While SMEs are reluctant to pass these increases onto consumers – who are understandably price-sensitive in an ongoing cost-of-living crisis – the pressure is forcing many into survival mode.
“Behind these numbers are real people under real pressure. Almost half of the small business owners we surveyed say financial pressures are directly impacting their mental health. Between looming business rates changes, the administrative weight of Making Tax Digital, and frequent policy shifts, long-term planning has become impossible. This environment doesn’t just stifle growth; it prevents our most vital, innovative community from reaching its full potential.”
Business owners react
Tony Robinson OBE is a business owner, author, and champion of micro businesses. He’s long campaigned for fair payment, asking the government to take action to normalise #Payin30Days. He says “The three main levers that the government has to enable the change to ‘fairness’, without legislation, are taxation, government funding, and procurement (including licensing and planning permissions).
“We can grow our businesses organically, without the business bank, trainers, and mentors you give us. And sustainably, if you reduce our unavoidable costs such as utilities, rates, employee National Insurance, VAT, the cost of regulatory compliance, and poor cash flow.”
Robinson added that fair payment terms is one example that would affect “every business in the UK” as “cash flow is the lifeblood of 99 per cent of all businesses”.
A sector that believes in itself
Despite the challenges, small businesses continue to demonstrate their self-belief and passion for what they do.
“What gives me hope is the resilience of this community”, Julie Fisher said.
“Despite the most challenging of backdrops, 86 per cent of small business owners tell us they still love running their own business. That’s not blind optimism – it’s a sector that believes in itself and is asking for the right conditions to prove it”, she added.
Julie urged the chancellor to take note: “Given policy stability, targeted tax relief, and support with rising costs, these businesses won’t just survive – they’ll thrive.”
More useful guides for small businesses
- Is Making Tax Digital replacing Self Assessment?
- New tax laws for businesses in 2026 – and Self Assessment shake-up
- Small business tax relief – a guide to reduce your tax bill
- New financial year checklist: how to prepare for 2026-27