Spring Statement 2025: What It Means for Restaurants and Cafés

On Wednesday 26 March, Chancellor Rachel Reeves delivered the Spring Statement. It was mainly a response to the latest forecasts from the Office for Budget Responsibility (OBR), and a chance for the Government to outline where things are heading next.

The full Budget has now moved to the autumn, so this wasn’t the moment for big tax shake-ups – but there were some announcements that could affect how hospitality businesses operate day-to-day.

Here’s what we think restaurant and café owners should be aware of.

A Quick Bit of Context

This Spring Statement was supposed to be routine – a check-in based on new data. But because of pressures from global trade issues and rising defence costs, it turned into something more substantial.

If the Government had stuck with last year’s tax and spend plans, we’d be looking at a £4.1 billion hole in the public finances by 2029/30. But by moving things around, they’ve managed to get back to a neat (and oddly specific) £9.9 billion of fiscal wiggle room.

Economic growth is looking a little better than forecast, aside from a dip expected in 2025. The problem is that this growth is coming from public investment – not from private businesses.

Confidence in the private sector has taken a hit, especially with last year’s announcement of higher employer National Insurance costs.

That increase kicks in from April this year – so if you run a team, it’s something to budget for.

What Are Labour’s Fiscal Rules?

There are two main ones:

• Public debt (excluding the Bank of England) should be lower – as a percentage of the economy – by the fifth year of the forecast.
  
  
• Day-to-day spending needs to be paid for with income, mainly from taxes, not borrowing.
  
  

The OBR gives the current plan a 51% chance of hitting the debt target. In other words: it’s tight.

Growth and Disposable Income

Growth for 2025 has been trimmed back from 2% to 1%, but the longer-term picture looks a bit more upbeat.

The OBR expects real household disposable income to rise faster than previously forecast this year. That could mean customers have a bit more to spend – an average of £500 more per household per year. Whether that trickles down to extra bookings or orders remains to be seen.

The £9.9 Billion Question

The fiscal buffer is back to £9.9 billion – but only just.

The Institute for Fiscal Studies has warned that sticking to the Government’s current rules may still require future tax rises. No increases were announced in this Statement, but don’t rule them out down the line.

Welfare Cuts: A Mixed Bag

Changes to welfare were confirmed – many of them affecting new claimants:

• Incapacity benefit will be halved to £97 per week and frozen there, saving £4.8 billion by 2029–30.
  
  
• Universal Credit’s standard allowance is going up (from £92 to £106/week), but the health element is being halved and frozen.
  
  

If your team includes people who rely on these benefits or are new to employment, this may affect their financial stability.

Defence, Tech, and Future Investment

An extra £2.2 billion has been allocated to the Ministry of Defence, with defence spending rising to 2.36% of GDP next year.

10% of that budget will be channelled into new tech – things like drones and AI. That might not sound relevant to restaurants or cafés, but the increased investment in automation and advanced manufacturing could trickle down into the tech used in hospitality (think smarter tills, AI menu tools, kitchen efficiency apps, and more).

Tax Crackdown – But No Increases (Yet)

No new taxes this time around. However, HMRC is hiring 600 extra staff to tackle tax evasion and aims to bring in £1 billion by 2029.

If you’re behind on filings or have been putting off any tax admin, now’s a good time to tidy things up – before the spotlight gets wider.

Public Spending and the Civil Service

The Government is aiming to trim Civil Service admin costs by 15% by 2030. That means fewer staff and more automation. Expect to see even more digital interactions with HMRC and other Government services.

Departmental spending is still growing, just at a slightly slower rate (1.2% above inflation, rather than 1.3%).

So, What Does It All Mean for Hospitality?

• Employer NI costs are rising – keep an eye on staffing budgets.
  
  
• Customers might have more disposable income this year (good news if you’re relying on footfall).
  
  
• Tax rises haven’t arrived yet – but they might still be on the horizon.
  
  
• Automation and AI are being heavily invested in – it may be worth thinking about how that can benefit your business.
  
  
• HMRC is on a mission – now’s the time to get your books in good shape.
  
  

Need a Hand with Planning?

At MSF Associates, we specialise in helping restaurants, cafés and hospitality businesses stay one step ahead – whether that’s managing costs, handling staff changes, or planning for what’s around the corner. If you’re feeling the pressure or just want to stay ahead of the curve, let’s have a chat. We’ll help you make sense of the numbers and put a plan together that actually works for you.