Spring Statement 2026: A Test of Economic Credibility for Rachel Reeves

Robert Salter, Director, commented:

Last year’s Budget involved a number of policy changes, but none wove together into a coherent strategy for the economy. Rachel Reeves must prove she and the wider Government have a plan to address the issues stifling UK growth.

For businesses and investors seeking stability, coherence matters as much as individual policy measures. Without a clearly communicated roadmap, uncertainty can dampen hiring, investment and expansion decisions.

Employment Policy and the Youth Jobs Challenge

We are keeping children in education for longer to keep them off the unemployment statistics but young people, including graduates, are struggling to find work. This is in part due to Rachel Reeves own policies such as the rise in employers National Insurance Contributions (NIC) and National Minimum Wage (NMW), both of which have negatively impacted the number of entry level jobs available.

Higher employment costs inevitably affect hiring decisions, especially for entry-level roles where margins are tight. For employers, increased National Insurance Contributions and minimum wage obligations may lead to fewer junior vacancies or greater automation. For young people, this risks delayed entry into the workforce and slower skills development – with long-term economic implications.

The Government needs a plan to mitigate the damage it has caused to the job market and to young people’s employment chances. Making the apprenticeship levy scheme more flexible and supporting businesses with the additional costs they face associated with entry level jobs would be a good start. Additionally, the Government could consider providing employers who employ people under 24 in their first full-time role with an employer NIC saving for the first 12 months of an individual’s employment, akin to the saving that is available to employers who recruit a military veteran seeking their first civilian job.

Targeted incentives of this kind could help reduce the risk premium employers associate with junior hires while signalling a pro-growth stance.

Education, Skills and Long-Term Employability

The impact of VAT on school fees on the job market and the number of places at state schools, which are at least in many cases already overcrowded, needs to be assessed. Children with Special Educational Needs and Disabilities pushed into mainstream schools may not be getting the support they need. Policy that impacts schools and therefore education can have a long-term impact on young people’s future employability.

Beyond immediate fiscal considerations, education policy shapes workforce readiness. If capacity constraints or funding shifts undermine support for students, particularly those with additional needs – the labour market effects may be felt years later.

Tax relief for personally funded training courses should be introduced. Currently an employee looking to ‘up skill’, or someone who is unemployed and uses their redundancy pay or spends their own money on a job-related training course typically gets no tax relief. This sends the message that the Government doesn’t want employees to try and upskill themselves. Supporting people to find new employment or improve in their current role helps growth.

In an economy facing technological change and productivity challenges, incentives for continuous learning could be a relatively low-cost way to stimulate growth and resilience.

Tax Administration and Business Certainty

Tax relief on mileage, available when an employee uses a private car for business purposes haven’t changed for nearly 13 years. The rates of relief available need to be made fit for purpose and updated for modern fuel costs.

While seemingly technical, outdated allowances can distort behaviour and increase administrative burdens. Keeping reliefs aligned with economic reality supports fairness and compliance.

The rules on IR35 (deemed employment) can often create real uncertainty and incredibly complex. The Government either needs to get rid of IR35 totally; or have a clear, statutory test on when someone is in IR35, so it provides all parties with certainty. This would make businesses less wary about using contractors.

Uncertainty around IR35 can discourage flexible resourcing, particularly in sectors reliant on project-based work. Clearer rules whether through reform or simplification would reduce risk and unlock more agile workforce strategies.

There has been no recent statement on how long it will take to train the much heralded 5,000 additional HMRC staff, where they are going to come from and how they are going to be used. This is concerning given the poor level of service many are continuing to experience from HMRC and the fact that Sir Jim Harra, the former Chief Executive of HMRC, previously indicated that it could take about 5 years for the full 5,000 new employees to be recruited and properly trained. An inefficient tax system stalls businesses plans and therefore their growth.

Administrative efficiency is often overlooked in growth debates yet delays and uncertainty in tax processing can directly affect cash flow and investment timing.

The International Dimension

Robert concluded:

Finally, the Government should openly push for European Economic Area (EEA) membership. This would allow the UK to be part of the EU’s single market but still negotiate trade deals with other countries. This would support UK businesses to expand internationally.

For exporters and internationally focused businesses, clarity on long-term trading arrangements remains critical. Any shift in the UK’s relationship with European markets would have far-reaching commercial consequences.

Why This Matters

Taken together, these issues reflect a broader theme: growth requires alignment. Tax policy, employment incentives, education reform, administrative efficiency and trade strategy must work together.

For businesses, the Spring Statement is not just about rates and thresholds – it is about confidence. A clearly articulated plan would help companies make informed decisions on hiring, training, investment and expansion.

What You Should Consider Next

Review workforce strategy: Assess how rising employment costs and IR35 exposure affect hiring plans, particularly for entry-level and contractor roles.

Explore skills investment: Consider structured training programmes and apprenticeship opportunities, while monitoring potential changes to reliefs.

Evaluate tax processes: Ensure compliance systems are robust amid administrative delays and potential reforms.

Plan for policy shifts: Scenario-plan for possible changes in employment incentives, education funding impacts, and international trade arrangements.

Engage advisers early: Proactive advice can help mitigate risk and identify opportunities as policy evolves.

Would you like to know more?

If you would like to discuss any of the above, please speak to your usual Blick Rothenberg contact or Robert Salter using the form below.