What does the budget mean for private-sector businesses?

We know that it has been a very bumpy ride for the UK retail sector over the last few years and this last quarter looks set to be just as bumpy. How retailers will fare in 2025 though is uncertain as we wait for the Autumn budget announcement at the end of this month. Peter Boolkah, a business coach and business owner has worked to help entrepreneurs and organisations to scale up their businesses for over 20 years and understands the issues they face.

With the combined pressures of poor weather, economic uncertainty, and shifting consumer behaviour, sales figures will likely either stagnate or dip slightly. The good news is that after Christmas, we may see some movement in retail sales. Heavily discounted post-holiday sales are likely to encourage consumers to spend on the items they delayed purchasing earlier in the season. But these markdowns will come at a cost to retailers, as they cut into profit margins and further emphasize the challenging retail environment.

Data released by the Office for National Statistics (ONS), highlights the challenges faced by the small business sector as a whole. Between early 2023 and early 2024, the number of small businesses in the UK dropped by 56,000. This was accompanied by a slight drop in employment within the sector, from 16.7 million to 16.6 million. This downward trend signals a broader issue though that, if not addressed, could further weaken the backbone of the UK economy. The Federation of Small Businesses (FSB) has also expressed frustration, declaring that small businesses are “sick of stagnation.” They want the government to take immediate action to restore business confidence, ease employment costs, and alleviate the burden of business rates on small firms.

In a matter of days we will know what the Chancellor, Rachel Reeves plans are in the Autumn budget. There are around 981,000 SMEs in London waiting and worrying about what this budget could mean for their businesses in 2025. London is the region with the highest number of SMEs in the UK according to Statista. By contrast, in 2024 there were just 132,900 SMEs in Northern Ireland, the fewest of any UK region. The government tell us that there are nearly 550,000 private-sector retailers in the UK which makes up around 34% of the private sector as a whole.

Tina McKenzie is Policy Chair at the FSB and has underscored the urgency of the situation, stating in many publications, “A decisively pro-small business Budget is the first and best chance for the Chancellor to secure sustainable growth by the end of the Parliament.” She says that the barriers preventing growth range from difficulties in securing finance to high business rates.

It seems that the budget is dampening consumer spending with some businesses citing poor government communication and a lack of clear and reassuring resolution on the horizon doing nothing to inspire confidence. Both Keir Starmer and Chancellor Rachel Reeves have hinted at tough times ahead due to the 22 billion pound black hole as they refer to it left behind by the outgoing Conservative government earlier this year. All this means that the general public as well as business owners are tightening their belts and not spending which is affecting both GDP and retail figures. We know that consumer confidence is all important when it comes to retail sales, and right now, that confidence is shaky. Households are still very concerned about rising costs, stagnant wages, and potential cuts or tax hikes. All these factors make people reluctant to spend, especially on discretionary items or luxuries.

None of this is good news for small businesses across the UK as it stifles their entrepreneurial efforts and puts unnecessary strain on firms. It highlights the need for targeted government interventions that support small businesses in taking calculated risks, growing their workforce, and navigating the rising costs of doing business and it is hoped that the budget may provide that. While post-Christmas sales may provide a temporary boost, the underlying issues suggest that retailers need to brace for a challenging end to the year and possibly a shaky start to 2025.  With the upcoming Budget seen as a pivotal moment, it is time that we push for reforms that could provide small businesses with the boost they need to drive economic recovery.