Several weeks ago That's Business published a tongue-in-cheek alternative budget, "The Alternative Budget Britain Didn’t Know It Needed" (link below), but now it's time for the "real" budget.
The next Budget from Chancellor Rachel Reeves is shaping up to be one of the most important in many years.
With sluggish growth forecasts, rising pressures on public finances, and a commitment to deliver a “growth-first” economic strategy, businesses across the UK are watching closely.
For SMEs in particular, the big question is this: what might Reeves include in her Budget, and how will the decisions affect day-to-day trading, hiring and long-term growth?
Below, we break down the most likely policy areas, and what they could mean for business owners.
Why This Budget Matters So Much
The economic backdrop is tight. Slower-than-expected productivity growth has widened the fiscal gap, while the government has pledged not to raise income tax, VAT or employee National Insurance. That narrows the Chancellor’s options and increases the likelihood that business-related measures may be used to plug part of the shortfall.
At the same time, Reeves has repeatedly emphasised investment, private-sector growth, and support for modernisation — suggesting that the Budget may combine tax-related challenges with targeted opportunities.
Possible Budget Measures — And Their Impact on SMEs
1. Changes to Business Taxation
What might be announced?
Adjustments to employer National Insurance.
A review of business tax reliefs, possibly tightening older schemes while boosting new ones.
Potential reforms affecting dividend taxation or capital gains.
Potential impact:
Increased employment costs could make SMEs more cautious about hiring or expanding payroll. Or even trimming staff numbers.
Lean-margin businesses may feel pressure to freeze wages or consolidate roles.
Firms relying on older tax reliefs may face reduced support; those aligned to innovation, green tech or digitalisation may see gains.
What might be announced?
A move to support high-street and hospitality businesses by reviewing small business rates relief.
Potentially higher charges for larger commercial property footprints or under-utilised sites.
Potential impact:
Strongly positive for micro-businesses and independent shops if reliefs are expanded.
Larger SMEs with significant premises may see higher bills, prompting a re-think of workspace strategy.
Encourages efficiency, flexible working, and potentially hybrid office models.
3. Support Packages for Growth and Innovation
What might be announced?
Expanded access to government-backed loans.
More support for exporters and manufacturing.
Incentives for adopting digital tools, AI, and green technologies.
Potential impact:
Growth-ready SMEs could access new grants, credits or low-cost finance.
Businesses with clear digital or eco-transition plans may see the strongest benefits.
Export-focused SMEs may gain fresh momentum from expanded trade support.
This is one of the few areas likely to provide immediate opportunities rather than cost increases.
4. Labour Market and Skills Measures
What might be announced?
Funding for training, apprenticeships, and upskilling initiatives.
Support for industries facing labour shortages.
Possible adjustments to minimum wage trajectories.
Potential impact:
Improved access to skilled workers in sectors such as manufacturing, construction and tech.
A higher minimum wage would raise staff costs — particularly challenging for hospitality, retail and care.
SMEs that invest in staff development may gain productivity advantages.
5. Regulatory and Compliance Changes
What might be announced?
Updates to reporting rules for ESG and sustainability.
New requirements linked to energy efficiency or digital record-keeping.
Potential consolidation of some burdens on micro-businesses.
Potential impact:
Some SMEs may face new administrative tasks, especially in sustainability reporting.
Digital-first SMEs may find compliance easier and cheaper.
There may be support packages to help SMEs meet new requirements.
What All This Means for the SME Landscape
Likely outcomes
Margin pressure for some sectors — especially those with high labour costs.
Slower hiring in the short term if employer NI or wage costs rise.
Opportunities for ambitious SMEs in exporting, tech, manufacturing and sustainability.
Greater need for digital transformation as incentives increasingly point towards modernisation.
Funding routes opening up, but competition for grants and loans may intensify.
What SMEs Should Do Now
1. Strengthen cash-flow forecasting
Model scenarios in which employment or property costs rise. Spot vulnerabilities early.
2. Prepare to act quickly on incentives
Grants, loans and support schemes often open briefly — having business plans and forecasts ready gives you a head start.
3. Review hiring plans
Build flexibility into staffing structures where possible.
4. Assess whether you can benefit from digital or green incentives
If you’ve been postponing upgrades to your systems, equipment or processes, this Budget may justify action.
5. Engage with industry bodies
Trade associations often have direct dialogue with the Treasury and can flag sector-specific challenges.
Rachel Reeves’ upcoming Budget is expected to balance tough fiscal decisions with growth-focused measures, making it one of the most consequential for SMEs in recent memory.
While cost pressures are possible, even likely, the Budget could also open the door to new opportunities in innovation, exporting, sustainability and investment.
For SMEs, the key is to stay flexible, informed and ready to respond. Those who prepare now will be best placed to navigate whatever changes the Chancellor introduces.
That's Business will cover the budget over the next several days.
https://thats-business.blogspot.com/2025/10/the-alternative-budget-britain-didnt.html
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