Spring Statement 2025: What This Means for UK Muslims

The Spring Statement 2025 may not have had the drama of last year’s Budget, but beneath the surface, there’s plenty to unpack — especially if you’re a British Muslim.

While the Autumn Budget was defined by £40 billion in tax rises, this Statement was all about spending cuts, slower growth, and economic recalibration.

We’ve gone through the key announcements and broken them down — what’s changing, what it means for you, and why it matters especially for Muslims in the UK.

The Build-Up to This Year’s Budget

Before we dive into the changes, let’s take a step back and cover the key developments since October. In October, Labour unveiled its bold “Budget for Growth”, which brought in the biggest set of tax increases since the early ’90s.

Since then, things haven’t gone quite to plan:

• The economy shrank by 0.1% in January
• Inflation remains stubbornly high
• Interest rates and borrowing costs are biting
• And fears of a global trade war are growing, especially with Trump pushing new tariffs in the US

What all of this has meant is that the government was on track to miss its October targets by £4 billion, despite previously forecasting a £9.9 billion surplus — effectively creating a £14 billion shortfall compared to their original expectations.

Against this backdrop, the Chancellor has been backed into a corner and had to shift focus from raising taxes to cutting spending.

The Key Announcements & What They Mean For You

Welfare Cuts & Universal Credit Changes

What’s changing?

• The Universal Credit standard allowance will increase from £92 to £106 per week by 2029/30
• However, the UC health element will be cut by 50% and frozen for new claimants

As a result of these changes, around 3.2 million families are expected to be worse off, while approximately 3.8 million will see a financial gain by 2030 according to the government’s estimates.

It’s worth noting that the government’s decision to cut welfare spending is largely driven by the projected rise in health and disability-related benefits, which are expected to increase from £65 billion today to £100 billion by 2029 — a significant jump.

What this means for you
While the base allowance rise sounds like good news, the cut to health-related support is concerning — especially for vulnerable members of the Muslim community who may already face systemic barriers to healthcare or employment.

This will increase pressure on charities and food banks, including many Muslim-led initiatives that are already stretched. As a result, we should all do our bit and look to give more of our sadaqah and zakat locally to make sure that we’re looking after our neighbours at home.

Civil Service Job Cuts and Running Cost Reductions

What’s changing?
The government want to cut running costs by 15% by 2030, with an expected 10,000 job cuts across the civil service.

What this means for you
Trimming government fat is generally welcome, but if you or your family work in public sector roles — this could hit close to home. More broadly, it signals a shift toward leaner, tech-driven operations — with automation and AI playing a much bigger role.

Make no bones about it, the AI shift is real. If you’re in a potentially vulnerable role, now’s the time to future-proof your career by either:

• Becoming an early adopter of AI and positioning yourself as a translator or facilitator between tech and people
• Doubling down on human-first skills that AI still struggles with — like emotional intelligence, leadership, strategic thinking, and nuanced communication

Overseas Aid Cuts and Defence Spending Rises

What’s changing?
Defence spending, originally set to increase by £2.9bn next year, will now rise by an additional £2.2bn — taking total military spend to 2.36% of national income in 2026.

To fund this, ministers will reduce overseas aid from 0.5% to 0.3% of national income in 2027, alongside drawing from Treasury reserves.

This move appears to be largely driven by a desire to appease the US — and Donald Trump in particular, who has been vocal in criticising European countries for not spending enough on defence. It seems like a strategic attempt to stay in Trump’s good books, protect the so-called special relationship, and potentially dodge the tariffs he’s threatening to impose.

What this means for you
This shift in priorities may have serious consequences for Muslim-majority regions that rely heavily on UK aid. For many British Muslims who already give to these causes privately, this may feel like a further step back in the UK’s moral leadership abroad.

If aid cuts concern you, this is a good time to refocus your sadaqah and zakat on charities that are still on the ground — and to hold MPs accountable to ensure humanitarian efforts aren’t left behind in the name of defence optics.

Planning System Reforms Will Get Housebuilding Going

What’s changing?
The OBR estimates that the planning reforms announced last year will result in 170,000 additional homes being built in England over the next five years.
These changes are forecast to increase the size of the UK economy by 0.2% by 2030, and by 0.4% by 2035.

What this means for you
More homes being built is welcome — but let’s be realistic, demand still far outpaces supply, particularly in high-growth, urban communities with a strong Muslim presence like London, Birmingham and Manchester.

For young families trying to get on the housing ladder, this likely won’t move the needle much. Expect continued affordability pressures and competition for homes in Muslim-majority areas.

Previous Announcements Due To Take Affect From April

We covered these in detail in our previous budget article, but as a reminder, the following changes are set to kick in next month:

• Employer National Insurance rising from 13.8% to 15%, with the threshold dropping from £9,100 to £5,000
• Stamp Duty thresholds for second homes and first-time buyers being reduced
• Business Asset Disposal Relief (BADR) rate increasing to 14%
• Minimum wage rises across all age brackets

These measures combined could negatively impact growth. Higher employer NI increases the cost of hiring at a time when many businesses are already under pressure. The rise in BADR may discourage entrepreneurship, which is critical for economic growth. And while the minimum wage rise is good for workers, it adds to cost pressures for small businesses, which could slow hiring or even lead to job cuts in lower-margin sectors.

In short, while each of these changes may be defensible in isolation, together they risk dampening investment, reducing job creation, and adding friction to the recovery, particularly for SMEs and early-stage ventures.

Looking Ahead: What Could Actually Grow the Economy?

The Office for Budget Responsibility (OBR) has downgraded the UK’s growth forecast for this year from 2% to just 1% — a clear sign that the economy is still under pressure.

However, there’s cautious optimism further out. The OBR has upgraded growth estimates for the next four years to 1.9% in 2026, followed by 1.8% in 2027, 1.7% in 2028 and 1.8% in 2029. But these are modest gains — and they won’t come automatically. The question now is: what kind of economy are we trying to build — and who are we building it for?

Here are some principles and policies we believe could genuinely unlock growth, especially for communities like ours:

1. Invest Locally, Not Just Globally

For too long, our savings — via ISAs and pensions — have gone straight into propping up the US stock market and its associated tech giants (Meta, Amazon and Tesla et al). While global diversification has its place, we’ve neglected the real economy on our doorstep.

At Cur8, we’re actively working to change this — by channelling capital into local businesses, infrastructure and cutting edge startups. When investment circulates in our communities, it creates jobs, keeps wealth within the community and drives long-term local growth — rather than just stock price gains for companies half a world away.

2. Reimagining Tax: A Zakat-Inspired Model

What if we stopped taxing productivity and started taxing stagnation?

The current tax system penalises people for earning income, taking risks and creating jobs — but barely touches unproductive wealth that sits idle in assets and offshore accounts. A wealth tax inspired by zakat would flip this model.

Zakat doesn’t tax income — it taxes wealth that’s just sitting there doing nothing. Applied correctly, a similar approach could encourage circulation, reduce inequality and free up income to be spent or invested.

3. A Smaller, Smarter State Through Sadaqah and Zakat

A government that tries to do everything eventually runs out of steam — and money. But if faith-driven giving took on more of the social safety net, it could reduce the size of the state, and with it, the need for costly (and often misused) welfare systems.

Zakat and sadaqah are proactive, decentralised, and trust-based. They not only care for those in need, but also reduce the incentive to cheat the system — because the system is us.

The more we give, the less we need to be taxed. The less we rely on the state, the stronger our communities become.

4. Reviving Awqaf: Faith-Based Sustainability

Finally, we need to think long-term. The Islamic tradition of waqf (plural: awqaf) — charitable endowments that fund education, healthcare, and public services — offers a sustainable, low-cost, high-impact model for community investment.

Instead of short-term grants or inefficient spending, awqaf allow us to build assets that serve people for generations. Think: a school that funds itself. A food bank with a permanent income stream. A medical clinic with no need for donations year after year.

There’s a well-known modern example of a waqf in practice that many people aren’t aware of: the Clock Tower in Saudi Arabia. While most see it as just a hotel, its revenue is actually used to help fund the maintenance and operations of Masjid al-Haram. That’s waqf in action — a single asset generating ongoing income to serve the Ummah for generations.

How Should You Respond to the Spring Statement?

These are just some of the key highlights from a quieter but still significant Spring Statement. While headline-grabbing tax hikes have been avoided this time, spending cuts, slower growth, and rising cost pressures will be felt — especially by vulnerable households, workers and businesses.

Practical Steps You Can Take

1. If you’re a worker:
Start thinking seriously about how to AI-proof your skillset. Focus on roles and strengths that tech can’t easily replace — communication, leadership, problem-solving, and emotional intelligence. Learn how to work with AI, not against it.

2. If you’re a business owner:
Look for cost efficiencies and process improvements. Consider remote or flexible work arrangements to retain talent without increasing overheads.

Also make sure you’re claiming all the reliefs and allowances available to you, such as Employment Allowance, R&D tax credits, and any sector-specific support schemes. With rising NI costs and tighter margins, every bit helps.

3. For all of us:
Consider redirecting a portion of your sadaqah and zakat locally. There are families in our communities who are struggling — and Muslim-led food banks, schools, and charities that could really use the support. Local giving strengthens the social safety net from the ground up. If you’re looking for somewhere to give with impact, check out our Zakat Fund (which accepts both zakat and sadaqah) that is focused at donating to the most strategically impactful (and otherwise overlooked) areas for the UK Muslim community here.

4. If you’re investing:
Think beyond just global stock markets. Look into halal, local investment opportunities that support ethical businesses and community growth. We’ve put together a free halal investing checklist to help you get started — and if you’re looking for inspiration, check out what we’re doing at Cur8 Capital to channel capital into local, impact-driven ventures.