UK economy faces recession risk amid policy pressures, deVere’s Green says

Published 26/03/2025, 14:34
© Reuters.

Investing.com -- The UK economy is grappling with the risk of a recession, as the Spring Statement released today revealed increasing economic pressures. The government’s policy direction is making economic growth more challenging, according to Nigel Green, CEO of deVere Group, a leading financial advisory firm. Green’s assessment came in response to Chancellor Rachel Reeves’ Spring Statement on Wednesday that outlined spending cuts as a primary focus of the government’s agenda.

Businesses are currently dealing with rising taxes, growing employment costs, and new regulatory obligations, all of which are converging simultaneously. These factors could potentially stifle business investment and hiring. Despite the government’s assertions of promoting a pro-enterprise agenda, their policy direction appears to be eroding confidence and steering the country towards an economic slowdown.

Green criticized the government’s approach, stating that it’s making it more difficult for businesses to thrive. He pointed out that companies are being burdened with higher taxes and increasing wage costs, while also grappling with new employment regulations that complicate and increase the cost of operations. He described the current situation as a challenging environment for businesses aiming for growth.

The Office for Budget Responsibility confirmed today that it would reduce its 2025 growth forecast from 2% to approximately 1%. This decision follows similar actions taken by both the Bank of England and the OECD. Business leaders, including Green, believe these revisions reflect the harsh economic reality they’ve been cautioning about for months.

Although headline inflation has marginally decreased from 3% to 2.8%, the Bank expects it to climb again through 2025. Interest rates continue to be high and with borrowing exceeding expectations, the Treasury’s capacity to support the economy is diminishing. The Chancellor’s £9.9 billion fiscal buffer has been exhausted, leaving little room for flexibility.

In response, ministers are planning to implement spending cuts. Departmental spending increases will be limited to just 1.3% per year, benefits are likely to be cut, and approximately 10,000 civil service jobs could be eliminated. Green characterized this approach as "austerity-lite," describing it as a slow squeeze disguised as prudence, which could lead to stagnation if growth is already weak.

Despite the government’s pro-deregulation stance, the business community remains skeptical. Green pointed out that aside from some trimming of outdated rules, not much has been done to significantly alleviate the pressure on employers. Many are now dealing with increased legal obligations and compliance costs that negatively impact productivity.

Green criticized the Labour’s deregulation agenda as being more of a quiet tinkering rather than a wave of liberalization. He also noted that the policies that have been bold—on tax, wages, and employment law—are actively hindering growth. He argued that the gap between rhetoric and reality is widening, with the Labour’s policy environment becoming more expensive, more complex, and less competitive.

Green warned that the current trajectory is increasing the risk of a recession. He urged for a reset that supports businesses to invest, hire, and expand, which would entail less tax, less drag, and a genuine shift in priorities.

As UK firms prepare for April’s changes, there are concerns that “a slow grind is already underway”—one that could escalate into a full-scale downturn if policy doesn’t align with economic reality. Green called for serious economic leadership, suggesting that the consequences of these policies must be confronted and private enterprise should be placed back at the heart of the recovery. He stressed that growth won’t return on its own—it has to be enabled.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.