The Autumn Budget of So Called Change

School’s back, the leaves will soon begin to turn and as autumn approaches, the anticipation surrounding the upcoming Autumn Budget to be delivered by Chancellor Rachel Reeves is palpable among people, but particularly among business owners. This budget will not only mark the first major financial statement from the new Labour government but will also set the tone for the future of the UK economy under its leadership.

Elected on a mandate of change, the Labour Party has promised a renewed focus on sustained economic growth, improved living standards, and a modernised partnership between business and government. For business owners, investors and stakeholders in the UK's economy, understanding the implications of their first budget is crucial for strategic planning and future investments.

The Labour Party's recent general election campaign centred on a belief that sustained economic growth is the only route to improved prosperity and that this growth must be inclusive, lifting the living standards of working people across the nation. Chancellor Rachel Reeves, has positioned herself and her party as the champions of both workers and businesses – not a bad thing for business owners. In a speech to business leaders at Rolls Royce in May 2024, Reeves emphasised the symbiotic relationship between the two, stating, "The changed Labour Party is today the natural party of British business." Her promise to lead the most "pro-growth" Treasury in UK history is a bold statement of intent, suggesting a balanced approach that seeks to meet the needs of both workers and businesses.

What to Expect from the Autumn Budget

The upcoming Autumn Budget is expected to be a reflection of Labour's broader economic vision. Business owners should prepare for a series of measures aimed at fostering a supportive environment for business growth while also addressing the needs of the broader population.

1. A Pro-Growth, Pro-Business Tax Environment

One of the most significant announcements from Chancellor Reeves was the commitment to cap corporation tax at its current rate for the duration of the next Parliament. At 25%, this rate is said to be the lowest among G7 economies, arguably making the UK an attractive destination for both domestic and international investors.

Reeves has also pledged to publish a business tax roadmap within the first six months of Labour's government. This roadmap is expected to provide clarity and stability, giving business the confidence to plan for the long term. The aim is to create a predictable tax environment that encourages investment, fosters innovation, and supports the growth of SMEs and large enterprises alike. Labour also say they will introduce a new fiscal lock, guaranteeing the Office for Budget Responsibility the power to assess any significant tax and spending changes announced by government. If nothing else, for business owners this means transparency and a level of certainty as to what to expect.

2. The National Wealth Fund to Unlock Private Investment

A cornerstone of Labour's economic strategy is the creation of the National Wealth Fund, a bold initiative aimed at driving investment in key sectors of the UK economy. By partnering with private investors, the new government says it will attract tens of billions of pounds in private investment, to be channelled into creating jobs, driving down energy costs, and achieving energy independence.

This initiative will be welcome news to companies operating in sectors such as clean energy, advanced manufacturing, and digital technology as those likely to be key beneficiaries of this strategy.

3. Clean Energy Superpower

The Labour government's mission to make Britain a Clean Energy Superpower is another critical component of its economic agenda and those operating in the energy sector will be watching with a keen eye as developments and investment is made in the sector. This mission has already seen tangible action, with the creation of Great British Energy, a state-backed entity designed to partner with the private sector and secure investment to accelerate the transition to renewable energy. To deliver their clean power mission, Labour say they will work with the private sector to double onshore wind, triple solar power, and quadruple offshore wind by 2030! Bold statements which will be observed keenly by those operating in the energy sector.

The Autumn Budget is expected to build on these initiatives. For businesses, particularly those in the energy, construction, and infrastructure sectors, this presents a wealth of opportunity.

However, this focus on green energy also comes with challenges. Business will need to adapt to new regulations and standards aimed at reducing carbon emissions and promoting sustainability. Those that can innovate and align their operations with this green agenda stand to benefit significantly, while those slow to adapt may find themselves at a disadvantage. Any business owners looking to sell up in the near future should consider what these developments could mean for them as it is inevitable that due diligence processes are likely to scrutinise the energy policies of any target, no matter their size and industry.

Conclusion

For business owners, the 2024 Autumn Budget arguably represents both an opportunity and a challenge, perhaps depending on perspective. On the one hand, the Labour government's apparent pro-business stance, combined with its stated commitment to fostering economic growth, seems to offer a supportive environment for expansion and innovation.

On the other hand, the focus on clean energy and sustainability will require businesses to be agile and forward-thinking. Is the transition to a green economy achievable for all, will any particular sector or type of business be left behind and is the infrastructure there to support the 5.51 million SMEs to pivot their business models to align with this new reality and what will the cost to individual businesses be?

We will keep an eye on key developments and what they mean for business owners.

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