Spring Statement 2025: Jupiter’s experts react

We asked some of Jupiter’s investment experts to give their reaction to the Chancellor’s statement in the House of Commons.

Tim Service, Investment Manager, UK Small and Mid Cap

“After the fallout from the October Budget, Rachel Reeves will have been keen to make her Spring Statement a non-event. Tetchy bond markets, a sluggish UK economy and increased urgency to ramp up defence spending have all conspired against her: as evidenced by cuts today to civil service budgets and welfare spending, to keep the government within its self-imposed fiscal guard rails.

It is not all doom and gloom for UK equity markets, however. Valuation matters: UK small and midcap equities are valued at low multiples of profits compared to international peers and the UK’s own history. The fundamentals are not all bad either: consumer savings rates are high, and listed companies generally have low leverage. Both have the scope to take on more risk should animal spirits and confidence return. And while no economy will be immune to the fallout from a full-on global trade war, the UK has limited direct exposure to US tariffs.

The new(ish) Labour government fairly gets marked down for communications and its tax policy mix,  but it is quietly pursuing several sensible initiatives to improve productivity and growth potential within the economy.

Perhaps most exciting for investors are the wide-ranging reforms to reinvigorate UK equity markets. These should not be underestimated. For the first time in a long while, there appears to be a joined-up attempt to fix the problems in UK capital markets, between Treasury, the Stock Exchange and the regulators. The list of initiatives is long, and includes a loosening in listing rules, a clear mandate shift for multiple regulators, an unwind of some governance red tape, multiple workstreams to encourage more UK savings money back into the domestic market, and – ongoing – more nuanced discussions around incentives, such as cash ISAs, pension tax reliefs and stamp duty. Will all of these bear fruit? No. But what feels most relevant is the sheer weight of initiatives and collective will behind them, set against almost universal scepticism of their success. Watch this space.”

Huw Davies, Investment Manager, Fixed Income

“The government is positioned between a rock and a hard place. There is no revenue growth as the economy’s growth profile has deteriorated quite significantly, and they haven’t got a lot of flexibility due to strict fiscal rules.

It won’t be easy to get some growth into the economy. The way to do it might be to get an improved trade deal with Europe or with the US. However, the prospects for either look slim unless the government and King Charles can charm President Trump on his UK state visit. As for closer ties with the EU, that’s tricky because the toxicity of the single market and the EU remains in British politics.

The UK’s economic growth outlook from the Office for Budget Responsibility looks pretty dire and that leaves the UK’s fiscal position looking precarious over the coming years. The financing requirement for 2025/26 is in line with expectations but the borrowing over subsequent years still looks high. The immediate market reaction was positive on the view that the news wasn’t even worse, which is a sign of how poor sentiment around the UK has been recently.”

Vikram Aggarwal, Investment Manager, Fixed Income

“We were cautious on UK government bonds (gilts) before the Spring Statement, and the Chancellor’s speech didn’t change that view. Pricing in the gilt market implies the highest interest rates at the end of the current cycle compared to any other major developed market economies, including the US. This seems incongruous given the UK’s relatively weaker economic growth outlook and its vulnerabilities, such as an expensive housing market.

One might be tempted to say that the gilt market seems ‘cheap’ and an attractive buy: however, this ‘cheapness’ has persisted for many months (or even years) and the market is overwhelmed by the regular increase in market borrowing requirements. The deterioration in UK public finances can’t be underestimated.

Today’s Spring Statement should have less of an impact on market than last October’s Budget, given that a lot of the deterioration in the numbers is now already known. It feels like the government is attempting to drip-feed negative fiscal and borrowing news to the market.

With regards to the economic crisis, growth has failed to accelerate in recent months and tax revenue collection is underperforming. Finally, on trade, there is heightened uncertainty and, potentially, retaliatory trade policies to be implemented by the new US administration.”