Business leaders have called for more action to create conditions for growth in the wake of the UK Government’s Spring Forecast.
Chancellor Rachel Reeves said her economic plan was “even more important in a world that has become yet more uncertain,” adding that the plan was bringing stability in public finances, investment in infrastructure and reform to the economy.
The Office for Budget Responsibility said that real GDP growth was expected to slow from 1.4 per cent in 2025 to 1.1 per cent in 2026. It also said that a loosening labour market and falling energy and food price inflation were likely to contribute to inflation reaching its 2 per cent target in late 2026.
In its forecast it noted that conflict in the Middle East could have “very significant impacts” on the global and UK economies.
Louise Hellem, CBI Chief Economist, said:
“In a period of geopolitical upheaval, a Spring Forecast that prioritises certainty over chasing headlines is the right approach for the Chancellor.
“Reducing the cost of living, cutting borrowing and growing the economy are the right priorities, but they can’t be achieved without clear efforts to tackle the high cost of doing business. That’s what will give firms the headroom they need to invest in the technology, trade and training that drive jobs and wage growth.
“That requires government and business to work in partnership to lower industrial energy costs, find practical solutions to implementing the Employment Rights Act, and design a tax system that rewards, rather than penalises, employment, investment and risk-taking.
“Businesses back the growth mission and want to see delivery at pace. Delays in planning consents, skills approvals, grid connections or access to innovation funding translate directly into lost investment, higher costs and greater operational uncertainty.
“Modern business needs a UK that can move at speed where government and industry work together to remove bottlenecks, build capability and deliver major projects. Now is the moment to turn stability into momentum and give firms the confidence to invest, grow and deliver for communities across the country.”
Policy Chair of the Federation of Small Businesses (FSB), Tina McKenzie, said:
“Inaction from the Chancellor is not enough for the UK’s 5.7 million small businesses and self-employed who are being squeezed by cost pressures and facing a new cost crunch about to hit in April. We’re a month away from employment costs going up, business rates going up and energy bills going up. The Chancellor missed the chance today to address the costs stack about to hit small firms.
“The downgrading of the growth forecast for this year will be no surprise to small businesses, where cost burdens have already started reducing growth plans, cashflow and job creation in our local communities.
“Given the heightened global tensions of recent days, if there is another energy price crisis the Government must stand ready to bring forward a package of help for small business energy consumers, akin to during the last huge price spike.
“As the April costs stack bites, the Chancellor must give assurance that she’ll take decisive action to ease the taxes and costs imperilling small firms and the self-employed, and in turn imperilling the jobs, opportunities and local prosperity they could otherwise bring.”
Lloyd Powell, head of ACCA Cymru/Wales, said:
“ACCA welcomes the Chancellor's commitment to a single fiscal event in a year. We have reiterated the need for simplicity, certainty and stability in the tax system, and holding to a single fiscal event contributes to that much needed stability.
“Undoubtedly, heightened global uncertainty, combined with the UK’s weak economic growth and rising unemployment, continue to make it a challenging picture for the Chancellor. However the Chancellor remained steadfast and positive in her vision for the economy.
“ACCA remains concerned that changes coming in the new tax year, such as the increased dividend tax rates and higher Capital Gains tax on specific reliefs, as well as business rates revaluation, will place yet more negative pressure on small business owners, sole traders, and taxpayers.
“In particular, the significant changes coming to Making Tax Digital from April will be a huge shift and one that has the potential to cause headaches for many taxpayers – and for HMRC. Combined with the continued hangover from increases to National Insurance Contributions for employers, and the prospect of higher fuel costs, there appears to be little respite ahead for small firms.
“ACCA appreciates the Chancellor’s intention to bring stability and clarity, but the need to deliver economic growth continues to dominate concerns. With challenging headwinds, the economic picture globally looks unsettled, and developments in the Middle East are clearly an important risk on both the growth and inflation fronts.
“As the Government lays the ground for its budget in the autumn, it’s becoming clearer that stronger action will be necessary to support tangible business growth.”
Ben Willmott, head of public policy at the CIPD, the professional body for HR and people development, said:
“Against an uncertain geopolitical backdrop, it’s critically important that the Government creates conditions that improve confidence and stability for businesses to deliver job creation and skills development.
“We welcome the Chancellor’s recognition of the challenges that many young people face entering employment, particularly the collapse in apprenticeship starts, and we’re encouraged to hear the Government will be setting out more reforms to support young people in the coming weeks.
“The Government can also support young people and employment more widely by considering pausing planned uplifts to the National Living Wage youth rate and ensuring the Employment Rights Act measures don’t act as a further headwind to job creation.
“This means meaningful consultation with employers and where necessary compromise on key measures in the Act still to be decided in secondary legislation. The Government must also ensure there is a well-funded communications campaign to ensure employers are aware of the changes ahead of time and adequate resources are allocated to Acas, so smaller businesses in particular have access to the support they need to comply.
“More broadly on growth, we need to see measures that will help employers across all sectors of the economy invest in skills and innovation. For example, ensuring the new Growth and Skills Levy helps employers invest in training their workforces to tackle skills shortages and supports the technology adoption that can improve productivity.”
Andrew Harding, FCMA, CGMA, Chief Executive of The Chartered Institute of Management Accountants, said:
“The Spring Forecast identified there is still a lot of work to be done to drive meaningful growth and address productivity. Whilst it is a positive message to talk about stability, we were hoping to see policy stimulation linked to skills, tax reform, and support for SMEs.”
In the Spring Forecast the Chancellor announced additional funding for the Welsh Government.
Secretary of State for Wales Jo Stevens said:
“The UK Government has the right economic plan to cut the cost of living, cut borrowing and grow the economy in every part of Wales. We are building a stronger, more secure economy which is increasingly vital in an uncertain world.
“The Chancellor confirmed an additional £555 million for the Welsh Government to invest in public services, like the NHS and education. This means the UK Government is providing the Welsh Government with nearly £6.5 billion in additional spending power over the spending review period.”
