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The Spring Statement is meant to be a low-key update on the OBR’s forecasts. However, the UK’s worsening economic outlook forced Chancellor Rachel Reeves into taking more decisive action.

The groundwork for this was laid during the much-scrutinised October Budget when the Chancellor introduced new “non-negotiable” fiscal rules, including a stability rule that requires day-to-day spending to be matched by revenues by 2029-30. The Budget also left just £9.9 billion in fiscal headroom – a narrow buffer to avoid breaching the rules.

In the opening parts of her statement, the Chancellor was forced to admit that this headroom has now disappeared, and that her fiscal rule was on course to be missed by £4.1 billion; a deterioration in public finances of £14 billion since the Budget, driven by weaker-than-expected economic growth (the OBR has downgraded its 2025 growth forecast from 2% to 1%), lower tax receipts, and increased debt servicing costs.

Acknowledging the gravity of the situation, the Chancellor highlighted that “the world is changing before our eyes”. Like many international counterparts, the UK has been impacted by the Trump administration, a global rise in borrowing costs, and sticky inflation. However, the Government must also take some responsibility for its current predicament, where decisions in the Autumn Budget rattled the markets.

As the Chancellor spoke, it quickly became clear that this was not a Spring Statement focused on appeasing Labour MPs or even voters, but instead the markets, private sector and investors. Aspects of it will jar with some party members (particularly around welfare reforms), and the decisions taken are not those that any Labour Chancellor would ideally like to announce. Its aim was to reassure financial audiences that the Government was committed to taking the necessary action to deliver its plan for growth without breaking its fiscal rules.

For starters, this was not an emergency budget – there were no tax increases or additional borrowing announced (we will have to wait for anything on this in the autumn). Instead the Chancellor announced that she had restored the fiscal headroom through measures including plans to raise over £1 billion from tackling tax evasion; save £3.4 billion through welfare cuts; switch significant swathes of the overseas aid budget to defence spending; execute £2 billion of government efficiency cuts; and reduce day-to-day spending by £6.1 billion by 2029-30.

The Chancellor also hoped to boost the mood through several announcements including upgraded growth forecasts for the economy from next year through to 2029, a £3.25 billion transformation fund to reform public services through AI and technology, and a commitment to increasing capital spending by £2 billion per year compared to previous plans. Naturally, you can see how this would appeal to the markets, although it is up in the air how a growing set of disgruntled Labour MPs will react, with increasing concern within the party over where the savings are coming from (e.g. welfare cuts and the budgets of non-protected departments). 

Arguments from some that the Chancellor is turning towards austerity are overblown, particularly when taking into account the major public spending commitments made at the previous Budget. However, unless the economic picture changes, the Chancellor’s hand may be forced to wield the axe again in the autumn.

A lot now rides on the upcoming Comprehensive Spending Review and the publication of plans like the Industrial Strategy and 10 Year Infrastructure Strategy to convince the markets that this government can turn around an anaemic economy, attract inward investment and boost growth.

Yet, despite all this work by the Chancellor and her team to reset expectations, this could all quickly be blown off course by the looming deadline of the 2nd April, dubbed ‘Liberation Day’ by President Trump. The extent to which the UK will be directly exposed to the incoming reciprocal tariffs from the USA is still unknown, with mixed messages coming out of the White House.

Assuming that the UK is able to emerge relatively unscathed next week, the Chancellor will be hoping that today is a turnaround moment that secures her reputation as the right steward to bring “stability” to the UK economy and puts the Government back on track in the pursuit of growth. If this doesn’t start to materialise, then, come the next Budget, the pressure that she is already facing could reach boiling point, and her fiscal rules may not be the only thing members of her party start calling for to be dropped.

When Sir Keir Starmer took office last July there was no illusion that FMCG policy would take centre stage amidst a cost-of-living crisis and the highly-politicised debate around migration. However, as the Government enters its first full year of office there are plenty of watchouts for the industry – from an ambitious new Food Strategy to sweeping recycling reforms that could reshape the FMCG sector as we know it.

Pressures squeezing the bottom line

As we are all aware business currently faces a difficult economic backdrop; the Chancellor’s Autumn Budget did little to lift the spirits of FMCG retailers and manufacturers. A hefty increase in employer National Insurance (NI) contributions from April is set to add an estimated £5bn to annual operational costs, tightening already squeezed profit margins in 2025.

But this is just the tip of the iceberg. The introduction of the Extended Producer Responsibility (EPR) scheme will add yet another £3bn to the sector’s overall financial burden this year  – all while the Government grapples with the issue of illustrative base fees, leading to concerns amongst multiple material sectors and packaging users who have pointed  to disproportionate cost increases and market distortions.

All of this is playing a significant role in fuelling consumer inflation, which could explain the Government’s silence on the modest (and surprising) news of UK inflation being downgraded to 2.5% in December. There may be concern in No.11 that taking too much credit now for policy impacts in this space   would leave Rachel Reeves in a tight spot should we see inflation rises later this year when new NI rises and EPR payments begin to take shape.

National Food Strategy

One thing that was certain when Labour came into office was their ambition to deliver comprehensive, hard-hitting reforms around food.  The manifesto’s commitment to ban the sale of high-caffeine energy drinks to under-16s was a rare example of a  specific intervention in a document that intentionally lacked direct policy commitment, while a consultation to extend the Soft Drinks Industry Levy (SDIL) to milk-based drinks was issued alongside the Autumn Budget.

The cornerstone ambition to deliver a long-term Food Strategy to create a ‘healthier, fairer and more resilient food system’ – which Steve Reed has committed to publishing  in 2025 – is the culmination of Labour’s commitment to take a more rigid approach to food security and public health.

Of some comfort is Reed’s confirmation that the Strategy will be developed in partnership with industry, which could lead to a balanced approach where higher taxes for HFSS products aren’t viewed by government as the ‘silver bullet’ to tackle the obesity crisis. Health Secretary Wes Streeting has previously backed this approach, suggesting a high tax burden on HFSS products would disproportionately impact poorer families.

However, with the Government focused on revenue raising, the Food Strategy represents a landmark moment in understanding how Labour will marry health outcomes with the cost of living crisis. On timings, it seems likely the Government is keen to get over the EPR hurdle first before facing the next HFSS battle, so while there might be limited progress in H1 – now is the time for businesses to prepare and align internally on their red lines for future food policy.

Circular Economy Strategy

As we head into the first half of 2025, all eyes are on the Government’s delivery of a comprehensive Circular Economy Strategy – supported by the unveiling of Defra’s Circular Economy Taskforce in December, chaired by Andrew Morlet, former Chief Executive of the Ellen MacArthur Foundation.

Of particular interest will be the  approach taken to Simpler Recycling and the rollout of Deposit Return Schemes in light of major supermarkets urging a delay to the 2027 timeline. Still, the Government’s efforts to integrate various waste and resource policies into one cohesive plan is a step in the right direction – and one that industry has long called for.

But the big question remains: how much long-term vision will the Strategy offer? While the immediate focus will be on delivering the EPR, DRS, and Simpler Recycling reforms, the FMCG sector will be watching closely to see if the Strategy lays the groundwork for a future-focused reuse system.

How soon can we expect a truly circular economy? The answer will likely determine the long-term success of these ambitious plans.

The Bottom Line for FMCG

The policy landscape for the FMCG sector in 2025 is shaping up to be complex, unpredictable, and packed with opportunity – if you know where to look. From  inflationary pressures to sweeping food policy reforms and circular economy initiatives, it’s clear that 2025 will be a pivotal year for the sector. Navigating these changes will require strategic foresight, industry collaboration, and a clear understanding of how new policies will impact your bottom line.

To speak to our FMCG sector specialists about how we can support your business during a year of significant policy change, please contact Michael Broughton (michael.broughton@grayling.com).

Ahead of this year’s general election, the Prime Minister committed to turning “the dream of owning a home into a reality,” which is undoubtedly a noble aim given the social and financial stability homeownership provides.  

Labour’s analysis ahead of the election focussed on decades of under supply that have failed to keep pace with demand, most acutely in London, the South East and increasingly other major metropolitan areas.  

Rewarding failure 

Our current byzantine system of local government encourages local politicians to delay Local Plans and reject planning applications, as local elections turnouts are low are regularly favour anti-development sentiments.  

Having spent several years as a councillor and Cabinet Member for Housing trying – ultimately successfully – to adopt an ambitious Local Plan, I can attest to how incredibly frustrating and cumbersome the system can feel. 

Human costs of housebuilding failures 

Daily emails from families struggling to pay rent and local people being forced out of their home area would be enough to turn most – but by no means all – NIMBY-minded councillors into champions of housebuilding.  

Rough sleeping, sofa-surfing, unsustainable living situations, cost-of-living crunches and older children still living with parents, the social ripples and implications of housebuilding failures are profound and distressing.  

Having grown up in my local town and seeing communities broken up by excessive house prices was a slow-motion tragedy; increasing supply is crucial. 

Labour backs state power 

Despite my distrust of the current government’s appetite for bigger government and higher taxes, I welcome Labour’s announcement to take a sledgehammer to a sclerotic planning system and local political system that has played an ignoble role in suffocating supply of new homes, in particular: 

• introduction of mandatory housing targets to deliver 370,000 homes per year 

• focussing higher targets in areas with greatest unaffordability and potential for growth 

• mandatory review of green belt boundaries and introduction of ‘grey belt’  

Free-market alternative 

I do not believe that our political system would elect a government that would support a profound liberalisation of the planning system, whereby if you own land you can build on it without a consenting system, albeit within clear safety guidelines and rules. 

As with all market systems, supply would more closely track demand – however, the consequences of this with an ever-increasing population would result in outcomes the British public would almost certainly be horrified about.  

Real term price cuts or just keeping up 

Which takes me on to one of the central unanswered questions around these reforms, which is what long-term effects these reforms are intended to have on the affordability of homes in high demand areas.  

There has been limited coverage of whether the government’s new targets would result house prices rising slower than wages (i.e., real-term reductions) or will simply keep track with an ever-growing population (i.e., house price grows remains constant).     

If it is to be the former, the economic and social benefits are clear – cheaper, better-quality housing, affording the opportunity of home ownership in the country’s most desirable areas.  

If it is to be the latter, then the short-term economic stimulus through building, and reduced housing costs could potentially be wiped out as the increased supply is met with an ever-growing demand – bringing us back to square one.  

Immigration and Reform UK 

This question is inextricably linked to ongoing debates around the record levels of net immigration. Labour needs to be able to demonstrate that the homes they are building will make it easier for people to buy or rent homes in the areas they want to live and work.  

If the housebuilding is seen to simply be keeping pace with a growing population, then the discussion will keep coming back to net immigration being the cause of stubbornly high house prices.  

The Government will also face broader political questions on its decision to arguably relieve London with lower-than-expected uplifts in its targets and moving those to local authorities on the capital’s periphery and in more rural area, which now expect to absorb a greater proportion of the new homes.  

You can well imagine Reform UK – currently rising in the polls – making the argument that huge demand for homes from high net immigration is making housing unaffordable and putting pressure on non-metropolitan areas.  

The best counteraction to this argument is lower real terms house prices, increases in homeownership, lower interest rates and more affordable rent – naturally, none of this is easy but will be necessary to avoid immigration continuing to be a potent political argument against the housebuilding revolution Labour is endeavouring to lead.  

Grayling Planning & Infrastructure 

Grayling Planning & Infrastructure team provides communication and stakeholder engagement services that support the UK’s energy transition, major economic development projects and infrastructure delivery.  

Our multi-award-winning consultants, based in our nine offices across the UK, engage with communities on major TCPA and NSIP projects. We have experience supporting major garden villages and other housebuilding, as well as extensive public affairs expertise in the development space.  

If you have projects requiring communications and engagement support, please do get in touch planning&infrastructure@grayling.com.  

In 2024 more people are online than ever before, with 64% of the global population active on social media. It’s therefore no surprise that social media has become the most successful channel for marketers in the UK. As digital users such as Gen Z become more influential spenders, and Millennials continue to hold the highest amount of disposable income, we naturally see corporate and consumer business prioritising social media in a bid to capture the attention of this powerful digital-first demographic.

Digital prioritisation has played out across an array of industries but, most notably, in the political sphere. This shift has led to the rapid evolution of various social media platforms, from X to TikTok, as spaces for political discourse. This evolution presents a plethora of new questions and challenges for businesses interacting in this space.

Political Impact on misinformation

A social-first election

Political parties have spent more money than ever before creating snappy, social-first content, with the aim of engaging younger voters. A prime example is Kamala Harris, who spent $113 million on Meta advertising alone during her 15 week campaign, and $4.5 million on talent to fuel her iconic TikTok account.

Challenges

As a result of TikTok’s growing political slant, audiences are increasingly exposed to misleading political content, including falsified AI-generated clips. Examples from the UK include fake videos of ex conservative leader Rishi Sunak making claims about how he is spending public money. Similar deceptive content went viral on the platform during the US election campaign, with phots falsely depicting Taylor Swift endorsing Donald Trump. It’s becoming more difficult than ever for users to distinguish reality from AI.

Beyond TikTok, X is another platform at the heart of the political storm. X has historically been the target of public scrutiny thanks to reductions in security measures, leading to the spread of misinformation in right-wing politics. This misinformation is aggravated by owner, Elon Musk, sharing politically fuelled posts claiming “civil war is inevitable”. X’s lack of moderation and safety measures has led many high-profile users to quit the platform altogether.

Looking Ahead

Users are active on more platforms than ever and, thanks to the rise of interest-based algorithms, they’re discovering new content every day. Wherever users go, misinformation is bound to follow, so, to influence meaningful change across the social media landscape, businesses need to understand the risk of misinformation and have measures in place to protect their brand and consumers from deepfake culture.

Politics and Algorithms

The Echo Chamber effect

We all know that social media algorithms are hyper-personalised. On TikTok we are fed new content based on what we interact with, helping TikTok fuel higher platform engagements and dwell time. However, this year, there’s been reports of X feeds being created by the platform owners with the sole purpose of pushing a political agenda. As part of this, Musk is accused of swaying votes for multiple elections across the globe, including the UKs general election – giving us an insight into the power of algorithms and the dangers of being trapped in an constant echo chamber.

On a positive note, TikTok algorithms have effectively helped to unlock echo chambers by bringing important issues to the surface. TikTok helped thousands of people, internationally, see the parliamentary debate over the revision of the Treaty of Waitangi in New Zealand halted by politicians performing a traditional haka. The video went viral, raising questions as to where indigenous communities fall into social-first politics. Breaking down echo chambers helps social media users expand their perspectives and feel connected to new communities.

Challenges

To avoid X’s echo chamber, many users have opted to switch to alternative platforms. X has experienced a clear decline, most evident in the UK, with a drop in users from 8m to 5.6m, and in the US, with users falling by a fifth. X users are looking at competitor platforms like Meta Threads and BlueSky, to broaden the variety of content they are exposed to, or alternatively to Rumble.

Though many users have headed to alternative platforms, it still raises the question – is the echo chamber effect present on alternative platforms too, and is the algorithm at risk of blurring the lines between personal views and popular content?

Looking Ahead

Platforms need to allow a range of diverse perspectives in users’ feeds so that audiences can make informed decisions when it comes to politics – and other fields. When the algorithms prioritise less prevalent voices, it increases the chances of users uncovering untouched communities. Brands and spokespeople can help tackle the issues of echo chambers by having a presence across multiple social platforms, thereby helping to diversify multiple platform feeds, and giving more users a chance to experience new content.

Politics and Partnerships

The Rise of Political Influencers

The impact of content creators and influencers on politics has reached unprecedented heights, especially within the digital sphere. Numerous elections have taken place this year and many are the first to occur since TikTok has been established. In fact, a study found that 26% of UK social media creators and 39% of US creators have been approached by political organisations to create content for elections.

The recent US election showcases just how integral influencers have become in the political agenda. Most notable examples of political collabs were seen during the US elections. On the left we saw Kamala Harris on “Call her Daddy” – a mainstream, consumer-based podcast. On the right, Donald Trump formed a partnership with Jake Paul, a YouTuber, with a huge young male fanbase. We also see the impact at a European level with  Jordan Bardella, President of the National Front, showcasing just how useful his TikTok following of 1.7m was in the recent French elections.

Challenges:

When it comes to politics, trust is vital, , with 58% of people stating they ‘almost never trust politicians’ in Britain. Politicians have therefore leveraged influencers on digital platforms to retain and foster connections with audiences who are stereotypically hard to reach – from Gen Z users to niche sub-audiences who steer away from traditional media. In fact, more than two in five UK voters (43%) welcome creators posting political content – whether paid or organic – and this preference rises

Influencers are increasingly seen as more trustworthy than traditional politicians, particularly among younger audiences, due to their perceived authenticity – but, how much can a user actually trust them?

Looking ahead:

We need to be cautious of how influencer politics engages young voters. There are already concerns about the oversimplification of complex issues and the potential for misinformation so, with the increasing authority of influencers, brands and government authorities can help by sourcing influencers mindfully and with voters’ welfare in mind.

With the UK Budget now out of the way, all eyes will turn to the Scottish Budget, which is scheduled to be delivered on 4^th December. So, what can we expect from the Scottish Budget, how do changes to the political backdrop impact the parliamentary process for approval of the budget and what impact will the Chancellor’s announcement have?

Financial gains

First, the good news. Thanks to the uplift in the UK Budget, Scotland stands to gain (according to HM Treasury) an additional £3.4bn through the Barnett Formula – £610 million of which is earmarked for capital investment. However, although the Budget was broadly welcomed by the Scottish Government as ‘a step in the right direction,’ there are question marks over the impact of National Insurance contributions on the Scottish Budget to the tune of £500 million.

On the face of it, the UK Budget announcement will certainly give some relief to the Scottish Government and build in some short-term budgetary stability. However, the champagne corks will hardly have been flying as the impact of inflation, NI contributions and previous cutbacks will eat into the additional funding.

Additional capital spending will be particularly welcomed. The Scottish Government had all but put a halt on any new capital projects. This should at least enable some of those plans that were on the drawing board to move forward. But the backlog of need has steadily grown and it is likely that the funds available could easily be used many times over and delivery will remain slow.

Straitjacket

The Scottish Government is caught in an increasingly tight financial straitjacket due to rising labour costs and a relatively stagnant economy. From train drivers to refuse collection and college lecturers, there has been a steady stream of demands for higher wages. Some of these are ongoing and others are likely to arise in due course, though probably not to the same level as seen in recent years. The Scottish economic output in recent months has remained low, which will affect the appetite for taxes.

A cautious approach

The Scottish Government is therefore unlikely to be in a position to offer much more than a standstill budget in many areas.  That has serious political implications because as a minority administration, the SNP needs the support of at least one other political party to get its budget approved. There has been much debate about which party may be able or willing to do a deal and talk of red lines. What is likely is that one or more party will support the budget in return for significant investment in key policy areas, such as social care or climate action. A deal with the Scottish Lib Dems is often talked about as the most likely outcome, but it’s not a given and the Party will be keen to come away with a significant win.

The outcome of the Scottish Budget is therefore expected to be largely a cautious one. Modest spending plans in capital spending and in some priority revenue spending areas – such as education and healthcare. But there may be scope for some small surprises depending on what, if any, budget deal is done with a smaller party. Regardless, the SNP will be keen to rebuild the public’s trust as a competent manager of the Scottish Exchequer.