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  • 📈 Government Tightens Belt (Except on Military Budgets)

📈 Government Tightens Belt (Except on Military Budgets)

March 27, 2025

This is Cliff Equity, the UK’s business newsletter that keeps you informed on what’s important in tech, business and finance in less than 5 minutes

In today’s stories:

  • Government Tightens Belt (Except on Military Budgets)

  • Trump’s Tariff Turmoil: Cars Cost More!

  • Next's ÂŁ1bn Profit: Steady Wins the Race

The summary: The government is tightening the purse strings on welfare and public spending, but with housebuilding on the rise, defence getting a boost, and inflation set to ease, there’s a glimmer of hope—provided you can weather the bumps along the way.

The details:

  • Welfare & Benefits: Universal Credit and disability benefits will see tighter eligibility rules and frozen payments until 2030, with under-22s losing access to some health-related support.

  • Economic Outlook: Growth forecasts for 2024 have been downgraded, but stronger projections for the next four years suggest a larger economy than previously expected. Inflation is set to hit the government’s 2% target by 2027.

  • Housing & Spending: Planning reforms are expected to boost housebuilding by 170,000 homes over five years, while ÂŁ625m will be invested in construction skills. Public spending cuts and tax changes aim to restore a ÂŁ9.9bn financial buffer by 2030.

  • Defence & Public Services: Defence spending will rise by ÂŁ2.2bn next year, partly funded by cutting overseas aid. Government departments face 15% efficiency savings, with 10,000 civil service jobs set to go.

Why it matters: Fewer benefits and tighter welfare rules mean some will feel the pinch, while a cautious economic outlook suggests there’s still a long road to real prosperity. Housebuilding and defence get a boost, but with civil service cuts and leaner public spending, it's clear the government’s tightening its belt—just not on military budgets. As for inflation, it’s on track to settle, but until then, expect the cost of living to keep testing the nation's famed love of a stiff upper lip.

The summary: Trump’s car tariffs are shaking up global trade, rattling allies, and driving up prices, but they’re also nudging investments into the US—whether that’s a masterstroke or a motorway pile-up remains to be seen!

The details:

  • Trump’s Tariff Tactic – The former president slaps a 25% import tax on cars and parts, claiming it’ll fuel American manufacturing. Analysts, however, predict pricier motors, factory shutdowns, and diplomatic headaches.

  • A Costly Drive – The tariffs could add $4,000–$10,000 to car prices, hitting wallets hard. While Trump insists it's "permanent" unless you build in the US, Japan and the EU aren't taking it lightly.

  • Global Gears Grinding – Allies fume, stocks stumble, and the UK scrambles to dodge the hit. Canada calls it a "direct attack," while Brussels weighs its own counterpunch.

  • Winners & Wobblers – Hyundai pledges $21bn for US expansion, proving tariffs might work. Meanwhile, US carmakers plead for mercy, fearing higher costs could stall domestic demand.

Why it matters: Trump’s car tariffs are about as welcome as a pothole on the M25—expect pricier motors, grumpy allies, and potential factory chaos. With the UK exporting heaps of cars to the US, British manufacturers could take a hit while politicians scramble to keep trade smooth. Meanwhile, America’s own car giants are stuck between cheering for jobs and dreading the price hikes that could drive customers away.

The summary: Next's ÂŁ1bn profit proves it's still got the retail game nailed, juggling online savvy, global growth, and a dash of cautious optimism, while giving the government a gentle reminder about the real cost of taxing big business.

The details:

  • Next hits the ÂŁ1bn club – The retail giant raked in a cool ÂŁ1.01bn in pre-tax profit, up 10.1% year on year, sending shares soaring over 8%. But true to form, Next remained as excitable as a damp tea towel about the milestone.

  • Steady hands on the tiller – The company upgraded its profit forecast for 2026 to ÂŁ1.06bn, marking its eleventh consecutive upgrade. Its secret? A savvy pivot to online sales, overseas expansion, and a no-nonsense approach to post-pandemic retailing.

  • Cautious celebration – While investors might pop the champagne, Next warned against getting carried away, reminding everyone that “profits can go down as well as up.” A milestone, yes—but not a reason to lose one’s head.

  • A few words for Westminster – CEO Lord Wolfson took a swipe at government tax policy, cautioning that squeezing “big business” isn’t just a problem for boardrooms—it hits consumers, workers, and pension savers alike.

Why it matters: Next’s £1bn profit is a sign of retail resilience, proving that a clever mix of online focus and global expansion can keep the tills ringing—regardless of the high street’s woes. Despite hitting the £1bn mark, the company’s cautious tone shows that even success doesn’t get you a free pass to party—it’s all about keeping a steady course. And if you’re wondering what Lord Wolfson’s little political rant means: taxing businesses too much could lead to a lot more pain for your pocket than just the boardroom’s.