Reeves' Spring Statement Is a Mixed Bag for Industry

The UK’s Spring Statement 2025, delivered by Chancellor Rachel Reeves, introduces several measures that could significantly impact the amusement and low-stakes gaming machine manufacturing sectors, as well as the broader seaside economy.

Economic Growth and Consumer Spending

The Office for Budget Responsibility (OBR) forecasts a modest economic growth of 1.0% in 2025, with an acceleration to 1.9% in 2026. Real household disposable income per person is expected to grow by an average of around 0.5 percentage points annually from 2025-26 to 2029-30, driven by stronger wage growth and easing inflation . This increase in disposable income may lead to higher consumer spending on leisure activities, potentially benefiting amusement arcades and seaside attractions.

National Minimum Wage Increase

From April 2025, the National Minimum Wage for individuals aged 21 and over will rise to £12.21 per hour . While this enhances earnings for low-paid workers, it imposes additional labor costs on businesses in the hospitality and leisure sectors, including amusement arcades and seaside attractions. These increased expenses may necessitate adjustments in pricing strategies or operational efficiencies to maintain profitability.

Changes to Business Rates Relief

The government plans to reduce the Retail, Hospitality, and Leisure (RHL) business rates relief from 75% to 40% (capped at £110,000) starting April 2025 . This reduction could lead to higher operational costs for businesses in the amusement and seaside sectors, potentially affecting their financial stability and investment capabilities.

Employer National Insurance Contributions

Beginning in April 2025, employer National Insurance Contributions (NICs) will increase to 15%, with the threshold for contributions lowered to £5,000 . This change will raise employment costs for businesses, prompting some in the hospitality and leisure industries to consider reducing staff levels or altering business operations to manage the financial impact.

Inflation Outlook

The OBR forecasts that inflation will peak at 3.8% in July 2025 before falling close to the 2% target from the second quarter of 2026 onwards . While elevated inflation in the short term may increase costs for businesses, the anticipated stabilization could provide a more predictable economic environment in the medium term.

Conclusion

The Spring Statement 2025 presents a mixed outlook for the amusement and low-stakes gaming sectors, as well as the seaside economy. While potential increases in consumer disposable income may boost spending on leisure activities, businesses must navigate rising labor costs, reduced tax reliefs, and increased operational expenses. Strategic planning and adaptability will be crucial for these sectors to thrive amid these evolving economic conditions.

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27 March 2025

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