INDUSTRY ANALYSIS
The recent Spring Statement marks the next phase in the Labour government’s plans and provides cautious optimism, says Tom Hall, Chief Economist at Aqua Consultants TREADING THE TIGHTROPE
T he main themes from raising budget. This year set out the direction of travel for Labour’s spending priorities for the next four years and boosted sentiment. As with last year’s budget, the Chancellor delivered the maximum possible investment amid tight 2025’s Spring Statement included negativity about the economy and a tax- financial conditions, changing fiscal rules to unlock additional borrowing. The government continues to walk a tightrope of
is welcome. It’s a near doubling of the programme over the next five years, which had £11.8 billion allocated already. Combined with announcements of more help for small builders with streamlined planning for small sites and exclusive land from Homes England, the news is positive for builders. Long road ahead Cutting through the negative press, reaction from business has been broadly supportive. Long-term focus is the only answer to solve the British economy’s many issues. Productivity levels, investment and growth, housing, health, and crumbling public infrastructure are problems that will take time to solve. Investment must be made now to realise future benefits. Pressure is on to deliver results after years of cuts to public services. People are anxious for tangible improvements to public services and their financial prospects. Any lack of perceived progress will add pressure on the government. All in all, the Spring Statement provided a cautiously positive spending review with a focus on the long-term that should deliver benefits over the coming years,
This is Labour’s hope. Additionally, commitment to spend more over a longer period incentivises companies to invest and train workers. More money for priorities There was a clear focus on the levelling-up agenda, with commitments for major investments outside London. This is applicable for transport, with greater attention on local transport connectivity outside of the South East – with more funding for Northern Powerhouse Rail, East West Rail, Midlands Rail
Tom Hall
government debt, strict fiscal constraints and the need to keep financial markets from panicking. A highly febrile
Hub, and Welsh rail projects. Energy is the biggest single
winner in monetary terms, with the government focusing on nuclear: ● confirmation of Sizewell C; ● £8.3 billion for Great British Energy to trial small modular nuclear reactors; and ● £2.5 billion for nuclear fusion research. Relevant to construction, is the £13.2 billion for home insulation, which will deliver certainty for service providers. Critics will say it is not enough but it is as much as could have been hoped for right now. Turning specifically to housing, £39 billion in grants on affordable housing over the next 10 years
global economy brought on by US trade wars, and war in the Middle East, makes everything riskier. The Chancellor seems to have skilfully achieved that balance (as she did with the spring budget). A higher level of long-term capital investment will be delivered without a spike in the UK’s bond yields. The theory is that, over time, this investment will boost the UK’s long-term growth rate and improve its flatlining productivity. Studies show that when government investment is made, private-sector investment can “crowd in”.
but could easily be blown off course by unfolding events.
Master Builder 17
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