UK faces recession risk as Spring Statement confirms growing pressures

The UK economy is facing recession risks, with today’s Spring Statement confirming what many had feared: conditions are worsening, and government policy is making it harder, not easier, to grow.

This is the assessment of Nigel Green, CEO of financial advisory giant deVere Group, following Chancellor Rachel Reeves’ Spring Statement on Wednesday which put spending cuts at the heart of the government’s agenda.

Meanwhile, rising taxes, increased employment costs, and added regulatory obligations are all landing at once, threatening to choke off business investment and hiring.

Despite repeated claims of a pro-enterprise agenda, the policy direction from the government is undermining confidence and dragging the country toward a slowdown.

“The government talks a good game on growth, but it’s making life harder for the very businesses it needs to deliver it,” said Nigel Green, CEO of deVere Group.

“Firms are being asked to shoulder higher taxes and rising wage costs, while contending with fresh employment rules that make operations more complex and costly. It’s a punishing environment for growth-minded businesses.”

The Office for Budget Responsibility today confirmed that it would slash its 2025 growth forecast from 2% to around 1%. That follows cuts from both the Bank of England and the OECD.

Business leaders, including Nigel Green, say these revisions reflect the reality they’ve been warning about for months.

Headline inflation has dipped slightly, from 3% to 2.8%, but the Bank expects it to rise again through 2025. Interest rates remain elevated. And with borrowing running higher than anticipated, the Treasury’s room to support the economy is narrowing. The Chancellor’s £9.9 billion fiscal buffer has already been wiped out, leaving little scope for manoeuvre.

Instead, ministers are preparing to cut back. Departmental spending increases will be capped at just 1.3% a year, benefits are expected to be reduced, and 10,000 civil service jobs could go.

“The result is a fiscal stance that doesn’t dare speak its name—but walks and talks like austerity-lite.

“It’s a slow squeeze disguised as prudence. But squeezing harder when growth is already weak is a recipe for stagnation.”

While the government has positioned itself as pro-deregulation, the business community is less convinced.

“Beyond some long-overdue trimming of outdated rules, little has been done to materially reduce the pressure on employers. In fact, many are now facing increased legal obligations and compliance costs that cut into productivity,” notes the deVere CEO.

“There’s nothing radical here. Labour’s deregulation agenda only looks bold because of how little progress there’s been in the past. This isn’t a wave of liberalisation—it’s more like quiet tinkering. Meanwhile, the policies that have been bold—on tax, wages, and employment law—are actively holding back growth.

“The gap between rhetoric and reality is growing. Despite promises to back business, the Labour’s policy environment is becoming more expensive, more complex, and less competitive.”

The Prime Minister’s and the Chancellor’s pledge to strip away barriers to growth is being directly contradicted by the measures being introduced.

“With the current trajectory, recession risks are rising by the day,” said Green. “What we need now is a reset—one that backs businesses to invest, hire and expand. That means less tax, less drag, and a genuine shift in priorities.”

As firms across the UK brace for April’s changes, the concern is that “a slow grind is already underway”—one that risks becoming a full-scale downturn if policy doesn’t catch up with economic reality.

“It’s time for serious economic leadership,” concludes Nigel Green. “That means facing the consequences of these policies head-on and putting private enterprise back at the centre of the recovery. Growth won’t return on its own—it has to be enabled.”