Reforecast of UK Growth: What It Means for You and How to Keep Your Financial Plans on Track

Looking Ahead with Confidence

The UK’s latest economic forecast may point to slower growth in the short term, but it’s far from a reason to worry. In fact, now is a great time to review your financial goals and make sure your plans are working as hard as they can for you. With a clear view of where we’re headed – and what steps to take – individuals, families, and business owners alike can move forward with confidence.

Spring Statement 2025 – The Headlines

Chancellor Rachel Reeves has announced that UK growth is expected to come in at 1% in 2025, lower than the previous forecast of 2%. While this indicates a more cautious short-term outlook, the longer-term projections remain steady, with growth expected to pick up to 1.9% in 2026 and stay close to that level in the following years.

Positive Signs: What’s Being Done to Support Growth

The government has already begun introducing reforms designed to stimulate long-term economic growth. These include bold new housebuilding targets – aiming for the highest level of construction in four decades – and planning reforms to help unlock land for development.

What does that mean for you?

• Homebuyers and renters may start to see improved affordability and more options as housing supply increases.
• Property investors could benefit from more opportunities and potential value in areas targeted for development.
• Business owners, particularly in construction and infrastructure, may see new chances for expansion and growth.

Global Risks

Recent tariff announcements by the U.S. administration have contributed to renewed volatility across global markets. While these developments may feel unsettling, it’s important to stay grounded.

At Fairstone, we understand that short-term market fluctuations are part of the journey and reacting to peak uncertainty often leads to poor investment outcomes. That’s why we maintain a disciplined, long-term investment philosophy focused on diversification, high-quality assets, and strategic planning.

We strongly encourage investors to avoid knee-jerk decisions in response to headlines. Staying committed to your long-term investment strategy is typically the most reliable path through periods of volatility.

Inflation, Incomes and What’s Changing

Inflation remains a factor, with the OBR forecasting it at 3.2% this year. However, it’s expected to fall back towards the Bank of England’s 2% target over the next couple of years – good news for household budgets.

Meanwhile, real household disposable incomes are forecast to rise, thanks in part to stronger-than-expected wage growth. On average, households could be around £500 better off per year compared to previous projections.

For Your Financial Plan, This Means:

• Now is a good time to review your spending and saving strategy – particularly in light of inflation and changing income expectations.
• Consider locking in competitive mortgage or loan rates where possible, to guard against future uncertainty.
• Make sure your long-term goals – retirement, homeownership, education – are aligned with your current financial habits.

Like all major economies, the UK isn’t immune to global risks – from geopolitical tensions to shifting trade dynamics. However, the government has reaffirmed its commitment to maintaining fiscal stability and creating a more resilient economy for the future.

Here’s what you should take away

1. Short-Term  Growth Doesn’t Equal Long-Term Decline
   While the UK’s growth forecast for 2025 is lower than expected, the longer-term outlook remains steady.
2. Opportunities in Housing and Property Investment
   With new government reforms aiming to boost housing supply, homebuyers, renters, and property investors may see more affordable options and investment opportunities. Strategic investments in these areas could provide long-term benefits, so it’s important to consider these developments in your financial plans.
3. Inflation and Income Adjustments Offer Financial Opportunities
   Inflation is expected to remain a factor in the near term, but with income growth outpacing expectations, households could see an increase in disposable income. This presents a chance to review your savings strategy and consider locking in competitive rates for mortgages or loans.
4. Global Risks Shouldn’t Derail Your Strategy
   Global events, like tariffs and market volatility, can cause short-term uncertainty, but reacting to them can lead to poor investment decisions. A disciplined, long-term investment strategy grounded in diversification and high-quality assets remains the best approach.
5. Proactive Planning for Long-Term Goals
   Whether it’s retirement, homeownership, or education, now is a great time to review your financial plans. Take advantage of opportunities and align your financial habits with your long-term goals to ensure steady progress toward your objectives, no matter what the short-term market conditions may bring.

The growth figures might not be as high as hoped – but this is not a time for pessimism. It’s a chance to take stock, make smart financial decisions, and position yourself to benefit from the UK’s long-term recovery.

If you’re unsure how these changes affect your personal or business finances, we’re here to help.

THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.