This move comes just five months after her initial Budget in October. Despite the need for fiscal consolidation, Ms Reeves confirmed no further tax increases would be implemented after she pledged to only have one Budget per year.

The Chancellor included £3.4bn in net welfare cuts, as modelled by the Office for Budget Responsibility (OBR), designed to meet Ms Reeves’ “non-negotiable” fiscal rules. Further cuts to day-to-day departmental spending are also anticipated.

These measures are intended to restore the government’s fiscal “headroom” to £9.9bn by 2029-30, matching the October forecast. The Spring Statement is a direct response to revised OBR forecasts, which revealed a £4.1bn shortfall against Ms Reeves’ key fiscal rule and downgraded 2025 growth predictions from 2% to 1%.

SFE chief executive Sandy Begbie CBE said: “The chancellor’s spring statement underlines the stark reality of the economic situation we find ourselves in. The current inflationary pressures, coupled with stagnant productivity and increasing levels of tax pose significant headwinds to business investment.

“Only genuine, long-term economic growth will help sustainably deliver on the goals of the government, and as our growth strategy set out financial and professional services will play a key role in driving this growth.

“Businesses instinctively understand the fiscal constraints facing the government and the difficult decisions required, but also the need for long-term strategic thinking that will deliver certainty and opportunity for both taxpayers and business. We welcome the government’s articulation of the importance of economic growth, but delivery is key and business will be watching closely for evidence that these promises are matched by action.

“While welcome the Chancellor’s commitment to public sector reform and reducing the cost to the taxpayer, there also needs to be a recognition that recently announced tax and regulatory changes are damaging to business and jobs. Simply, you cannot tax your way to economic growth and we need to see a clear industrial strategy that will allow business to invest with confidence and deliver real and sustainable growth.”

Susan Love, strategic engagement lead for Scotland, added: “ACCA’s data from SME financial professionals highlighted plummeting business confidence in recent months, largely driven by increasing costs.

As expected, today’s statement didn’t contain any additional measures that will impact upon business, but this year’s lower growth forecast, energy cost increases and the knock-on impact on inflation do little to boost confidence and investment.

“Spending cuts announced today – with more detail yet to come in June – have clear implications for the Scottish budget; not least given our higher rate of economic inactivity and Scottish social security system.

“This will present difficult choices to the Scottish Government, potentially restricting their headroom to invest in services, such as skills and infrastructure, aimed at boosting economic growth.”