Spring Statement: key takeaways for savers

Chancellor Rachel Reeves delivered her Spring Statement to Parliament today, offering insight into the UK’s economic outlook. While the statement lacked any major tax or personal finance announcements, it followed welcome news: UK inflation fell by more than expected in February.

Let’s look at some of the key takeaways and how they impact your savings.

UK growth forecast cut by half

The Office for Budget Responsibility (OBR) has cut the UK’s growth forecast for 2025 – from 2% to just 1%. But Reeves was keen to emphasise that ‘by the end of the forecast, our economy will be larger compared to the OBR's forecast at the time of the budget’. So, despite a slower growth rate for 2025, the longer-term outlook remains more optimistic.

Household disposable income is set to grow at almost ‘twice the rate’ forecast in October, meaning people will soon be £500 better off each year.

Inflation outlook: a mixed bag

Inflation fell to 2.8% in February, down from 3% in January. This drop was marginally better than predicted – economists polled by Reuters had expected it to drop to 2.9%.

But the outlook remains uncertain.

The Bank of England predicts that inflation could rise again, potentially reaching 3.75% by the third quarter of 2025, before gradually declining. If this happens, it could erode the real value of your cash – especially if your money is languishing in low-interest accounts.

There’s still a variety of strong interest rates on offer for both short and long-term accounts. By securing rates that outpace inflation, your money will have more purchasing power.

The OBR forecasts that inflation will average 3.2% this year, fall to 2.1% in 2026, and settle at the government’s 2% target by 2027.

Cash ISA limits remain unchanged – for now

One of the most closely watched topics of the Spring Statement was whether Reeves would reduce the Individual Savings Account (ISA) allowance.

Each year, you can place £20,000 into an ISA, with any interest earnings remaining entirely tax-free.

Despite speculation that the government might cut the annual ISA limit from £20,000 to just £4,000, it made no reductions. This is welcome news for savers, who can continue to enjoy the tax-free benefits of their cash ISAs.

But the Spring Statement document suggests a consultation is on the way. 

Pensions: a welcome pause on policy change

It will come as a relief to many that the Spring Statement didn’t introduce any changes to pensions.

The coming months will bring important developments, with the release of the Pension Schemes Bill. It will include measures to deliver better outcomes for future pensioners, by consolidating pension pots left behind when changing employers.

Savers should keep a close eye on these changes, as they could have long-term implications for retirement planning.

What happens next?

Looking ahead, attention now shifts to the Autumn Budget later this year, where the government could unveil potential tax changes.

The Spring Statement may not have delivered any groundbreaking changes, but with inflation predicted to rise, now’s the time to rethink your savings strategy.

Time to wake up your savings

The latest data shows that £1.3tn in UK savings is asleep in low-interest accounts. When cash is left to languish, it’s savers like you who pay the price.

It’s not hard to find dozens of Fixed Term, Notice, and Instant Access accounts that continue to outpace inflation by more than 2%. But these rates won’t stick around for long.

Give your cash the best chance to bloom. By using cash savings platforms like Flagstone, you can quickly compare hundreds of savings products from 60+ banks – all with one login.