The Government has reiterated its ambition to grow the UK economy, and this Budget provides an opportunity to turn that ambition into meaningful progress for businesses, entrepreneurs and communities. There are encouraging signs for the medium-term outlook, with the UK economy growing and measures to support investment, innovation and regional development. The challenge now is to build on that momentum, ensure growth is sustainable and keep inflation under control.
From a business perspective, confidence is key. Companies need a stable environment in which to plan, invest, recruit and innovate. While the Budget offers welcome support in several areas, there are opportunities to build further on these measures by listening to businesses about what would help them thrive.
Support for smaller businesses, including changes to business rates relief, is welcome. For many businesses, managing overheads remains a significant challenge, and further consideration of the cumulative impact of tax and employment costs could help them invest in growth and create jobs.+
For entrepreneurs, targeted tax relief for founders of successful businesses recognises the risks involved in building a company and the value they bring to the wider economy. Greater certainty around the future treatment of business disposals would also help founders plan succession and reinvest their proceeds. The reduction in the amount of business asset disposal relief available is disappointing and to what extent the new founders relief will compensate for this is yet to be seen. More broadly, a consistent approach to tax policy would give businesses greater confidence to make long-term decisions.
The announcement that that the Enterprise Management Incentive scheme will be doubled which should be welcomed by those SMEs wanting to retain and incentivise key employees.
Innovation is another important opportunity. The £140 million investment supporting strategic British AI firms, alongside efforts to remove unnecessary regulation and barriers to trade, could help the UK turn its innovative strengths into commercial success. Further incentives for businesses investing in AI, automation, digital infrastructure and employee training could also improve productivity and help smaller firms embrace new technology.
On a slightly more pessimistic note, I do feel like a lot of announcements were aimed at start-ups and small high street businesses, but there was less clarity around long term business ownership and disposals. Moving forward, I believe that needs to be addressed.
The decision to retain the £20,000 annual ISA allowance, rather than proceed with plans to reduce the cash ISA limit, preserves choice for savers. Encouraging greater investment in shares and UK businesses is a worthwhile ambition, but education and confidence may prove more effective than restricting options. Meanwhile, changes to the bank surcharge and gambling taxation form part of the wider tax picture, and their implications for investment, lending and consumer confidence will be worth monitoring.
Regional growth and access to skills are equally important. The proposed Good Growth Fund for regional mayors could help direct investment towards local priorities, including infrastructure, skills and business development. Support for scale-ups and female founders is also encouraging, while skilled worker visa reforms could help businesses access the talent they need alongside investment in the domestic workforce.
There are, of course, further opportunities to strengthen the environment for growth. Measures that reduce the cost of employing people, encourage business longevity and succession, and provide greater certainty around business and agricultural assets could help viable businesses plan for the future. Simplifying tax administration and maintaining a competitive environment for investment would also allow business owners to focus more time and resources on developing their companies.
Ultimately, the Budget is one part of a longer-term conversation about what businesses need to succeed. The Government must balance growth with sound public finances and the need to control inflation, but continued engagement with businesses will be essential to getting that balance right.
The opportunity over the medium term is significant. By building on the positive measures announced, providing greater policy certainty and listening to businesses about the barriers they face, the UK can strengthen its position as a place where people can start businesses, innovate, create jobs and build something of lasting value.
