Spring Statement 2025: Key takeaways for beauty industry workers

Chancellor of the Exchequer, Rachel Reeves, today (26 March) delivered her Spring Statement: an update on the UK economy since the formal Budget in October 2024, and its forecasted performance.

Focuses were on defence, taxes and governmental efficiency, with no measures announced that will hugely impact the beauty sector. However, Reeves has not increased taxes, and is maintaining Labour’s commitment to one fiscal announcement per year, in a bid to provide stability for businesses.

She comments: “This stability is paying off. The Bank of England have cut Bank Rate three times since the start of the Parliament. At the end of 2024, real wages were growing at their fastest rate in over three years.”

However, despite positivity for some workers and the government’s reiteration of its goals for growth, Reeves acknowledged that global economic uncertainty has increased sharply. Subsequently, growth has slowed in many of Britain’s major trading partners, with borrowing costs rising across most advanced economies.

The chancellor continues: “As an open trading economy, the UK is not immune to these challenges.” And the Office for Budget Responsibility (OBR) has reduced the UK growth forecast for 2025 from 2% to 1%. But, Reeves shared that by the end of the forecast in 2029, the economy will be larger than the OBR’s forecast at the time of the Budget.

Reeves went on to deliver goals to: ‘Go further and faster on reform, to fix public services, so that taxpayers get better value for money’, and ‘kickstart economic growth, to drive up prosperity and living standards across the UK’.

Key takeaways:

• No tax cuts and a crackdown on evaders. 

The Spring Statement does not contain any further tax increases, but the government is continuing its work to close the tax gap so that more individuals and businesses pay what they owe. Measures include prosecuting 20% more tax fraudsters by 2029-30 and rewarding informants. Reeves says that reducing tax evasion will raise an additional £1bn for the economy.

• Greater investment in employment support.

Getting ‘more people into better jobs’ is the aim of Labour’s growth mission, and it will ‘invest in additional employment, health and skills support from 2026-27 to help people start or stay in work, and not fall into long term economic inactivity, scaling up to £1bn a year by 2029-30’.

• Welfare cuts and changes.

The Office for Budget Responsibility (OBR) informed Reeves prior to the Statement that her planned benefit cuts would not raise the £5bn hoped. Rather, they would raise £3.4bn by 2029-30. This has led to changes in welfare spending.

The Universal Credit standard allowance will be increased for new and existing claims above inflation from 2026-27, but the health element will be frozen for existing claimants until 2029-30. For new claims, the Universal Credit health element will be reduced to £50 a week in 2026-27 then frozen until 2029-30.

The OBR estimates that the welfare savings package will save £4.8bn, however the government’s impact assessment says 250,000 more people will be pushed into poverty by 2030 as a result of these cuts.

It is predicted that 3.2 million families are expected to lose an average of £1,720 by the end of 2030, due to the changes announced.

• Future financial forecasts.

Reeves shared that disposable income will ‘grow this year at almost twice the rate expected in the autumn’ and ‘households will be, on average, over £500 a year better off under this government.’

The OBR predicts the economy will be ‘larger’ by the end of the forecast compared with the time of her first Budget as a result of her decisions, with output expected to grow by 1.9% in 2026.

Industry comment 

The lack of support for the hair and beauty sector in the Spring Statement may be disappointing for its workers, who contribute almost £6bn to the UK economy.

Following the measures in the Autumn Budget 2024, the National Hair & Beauty Federation (NHBF), called for an immediate review of VAT to level the playing field between employers and self-employed workers, alongside targeted support for apprenticeships and business rates reform.

No action has been taken in the Spring Statement to support these moves, so there may be risks of ‘losing not just jobs but the training infrastructure that has been the backbone of our sector’.

The British Beauty Council has reaffirmed its commitment to supporting the sector via a dedicated high streets strategy, with an aim to ease disproportionate business costs that can impact jobs and growth.