In the recent UK budget, the Chancellor emphasised a commitment to rebuilding and investing in the nation’s economy, reminiscent of post-WWII recovery efforts. This was the first budget ever delivered by a woman, aiming to confront the perceived economic challenges left by previous governments. Here are some key highlights:
Public Finances and Economic Stability
The budget included a detailed line-by-line review to address a £22 billion deficit in public finances. Taxes will rise by £40 billion to support this goal, and economic stability will be maintained with a focus on keeping inflation at 2%. A new “stability rule” requires the government to balance its current budget without borrowing to cover day-to-day expenses, alongside a 2% target for improving productivity and efficiency through technology.
Business and Industry Support
A significant £70 billion has been allocated for infrastructure development, modernising planning rules, and backing local growth initiatives through devolution programs. The “Skills England” initiative aims to increase workforce participation and combat economic inactivity, focusing on enhancing the UK’s science and innovation sectors. Other business-oriented measures include a freeze on the small business rates multiplier at 49.5p in 2025-26. In addition, an intention to permanently reduce lower rates multipliers for retail, hospitality, and leisure properties with a rateable value of under £500,000 from April 2025/26 providing a 40% relief (down from 75%) on rates with a cash cap of £110,000. Corporate tax will remain at 25%, and R&D relief will continue to support key industries. Moreover, to promote innovation, the budget sustains tax incentives like the Enterprise Investment Scheme, designed to encourage entrepreneurship.
Energy and Environmental Commitments
The “Energy Growth Mission” aligns with broader decarbonisation goals, including an increased Energy Profits Levy of 38% and removal of investment allowances, which supports energy transition efforts. The budget extends incentives for zero-emission vehicles and sustainable tech and raises the duty on private jet flights by 50% to fund green initiatives
Welfare and Social Spending
In response to cost-of-living pressures, the National Living Wage will increase to £12.21 per hour in April 2025, estimated to benefit full-time workers by £1,000 annually. Welfare funding will be made more sustainable, with expanded anti-fraud teams and measures to reduce welfare spending by addressing causes of economic inactivity.
Housing and Infrastructure
On housing, the budget earmarks £5 billion to boost affordable housing and £1.3 billion for social housing projects. It also increases the resources for local authorities to retain full receipts from social housing sales and accelerates remediation efforts on unsafe buildings alongside a target to employ hundreds of new planning offices to get “Britain building again”.
Support for Key Sectors
In addition, £63.5 billion has been pledged towards key sectors like aerospace, automotive, life sciences, and the creative industries. The budget highlights the “Innovation Accelerator Fund” to boost R&D in biotech, medical, and engineering fields, supported by new broadband and mobile infrastructure investments across rural areas.
Here are some reactions to the budget from leading industry figures:
Michelle Buxton, CEO of Toolbox Marketing and Revo Board Member
“Sadly the chancellor’s announcement has made things worse for retail and leisure businesses with many reliant on the 75% business rates relief. With this now reduced to 40% and with minimum wage and national insurance contributions increasing while the multiplier remains static, or is set to increase, cost increasing will be painful for those in the retail and leisure sector. Although we welcome the promise of a business rates discount for retail from 2026, it is kicking the can down the road and does little to encourage investment and innovation across the retail and leisure sector, in line with the government’s growth agenda.”
David Parker, Head of Rating, Savills
“The need to assist smaller businesses is undoubtedly acute and this measure goes some way to addressing that in part, but general business rates bills are unpopularly high, and have been for many years and so whilst the introduction of 40% tax relief for retail, hospitality and leisure properties up to a maximum of £110,000 per business is welcome, it is a reduction from the previous 75% relief. which will disappoint many. The annual multiplier in 1990 was 348p, meaning the annual bill was hypothetically 348% of a property’s rateable value. With it now approaching 60p (or 60%) of a rateable value for some properties, it’s disappointing that the funding of the relief to smaller businesses is at the direct expense of larger businesses.”
Vivienne King, Chair of the Shopkeeper’s Campaign and Revo Board Member
“Restricting retail, hospitality and leisure relief will leave shopkeepers facing higher business rates bills in April. We needed a comprehensive overhaul of business rates to address the failures in the system that continue to plague our high streets. We urge the government to continue engaging with the sector and to prioritise a comprehensive overhaul of the business rates system. High streets are the backbone of our communities, and their revival depends on creating a tax environment that encourages investment, growth, and entrepreneurship. There is still a long way to go to ensure that our high streets can thrive in a rapidly changing economy.
Tim Harding, Head of Occupier Rating, CBRE
“We are disappointed that the 75% retail, hospitality and leisure relief has reduced to 40%, a change that will affect small retailers who will feel the increase in rates bills due to the removal of 35% of the current rates year relief. Of more importance perhaps is the transforming business rates discussion paper published alongside the budget, in which the government set out to achieve a fairer business rates system to protect the high street. This includes ratable value thresholds under £500k being introduced to permanently reduce the burden on retail hospitality and leisure whilst a higher multiplier applies on ratable value above £500k.”
Josh Myerson, Head of Rating Advisory, Montagu Evans
“Business rates has not escaped scrutiny, but ratepayers who may have hoped to hear of the governments intentions to fundamentally reform the system or to meaningfully reduce the level of tax it seeks to raise will be left disappointed. Given the reduction in relief for those in retail, hospitality and leisure sectors next year, there is greater need for businesses in these sectors to ensure the accuracy of their current assessments and put themselves on a more secure footing.”
Neil Hockin, Head of Shopping Centre Leasing & Joint MD, Lunson Mitchenall and Revo Board Member
“Stability in the sector is hanging in a delicate balance, especially across the UK’s 750 towns and cities outside of major retail hubs. We had a chance to lay a foundation that goes beyond traditional economic measures and I really do think it is a missed opportunity to have not done more to unlock retail and leisure growth and pro-actively support these local economies with more community-centred policy approaches.I am not doubting the need for more housing and infrastructure and whilst it’s great to see more effort in reducing anti-social behaviour and retail theft, increasing civic pride would go further than any increase in punishment. The sector both contributes approximately 8% of the UK’s GDP and supports around 6.5 million jobs, but also holds great social value in terms of building community identity. Today’s budget could have been the catalyst for a brighter, more resilient future for these towns and communities. Going forward, this cannot just be a recommendation; it’s a necessity.”