Businesses need a post Budget confidence boost

The new Labour Government’s inaugural Budget has been a popular topic of discussion over the past few months, for both businesses and individuals alike.

There have been months of speculation as to what the budget will include, and importantly how it will impact people’s day-to-day lives.  

While the Government has given little away in terms of specific policies, the rhetoric of doom and gloom over a ‘black hole’ of £22 billion has certainly left many nervous about what to expect on 30 October.

After Labour’s landslide victory on the 4th July, there was a feeling of optimism and hope. The economy was improving, inflation was finally stabilising and the party was promising a new era of growth.

There were exciting new ‘big picture’ policies like the National Wealth Fund, bringing back mandatory housing targets and a clear focus on renewable energy.

However, fast-forward three months to today and the mood has shifted over the summer months and into the autumn.

The renewed confidence in the economy has been dented. September’s Lloyds Bank Business Barometer shows businesses are losing confidence, with the barometer dipping to a three-month low of 47%[1].

Whilst the Government wants to be honest with the public, which should be applauded, it needs to ensure that it is not talking the UK economy down unnecessarily, especially when there are many positives it could be focusing on instead.

Everybody understands it needs to pinpoint blame for the blackhole on the previous regime, especially as it will have to deliver some difficult messages, but maybe the gloom has gone too far.

For SME businesses, so much of their confidence is linked to sentiment created by media and fed by Government.

We know the autumn Budget will bring tough decisions, but so far, it’s all about potential tax increases with no mention of support or growth. The British Chamber of Commerce’s Quarterly Economic survey shows that tax, not inflation, is now the greatest concern for businesses.

We expect Full Expensing to be made permanent, which is a huge positive for the asset finance sector, but we also need a tax system that incentives investment and entrepreneurism, not punishes it.   

The Labour government did a great job of inspiring the public in the last General Election and they now need to do it again.

SME businesses need to see there is a plan to support them and the country’s growth – after all this is one of the key pledges they won the election on, so they need to deliver it.

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[1] Lloyds Bank Business Barometer – September 2024