UK CEOs warn Reeves budget falls short on growth measures

Business leaders have criticized Chancellor Rachel Reeves, who, according to them, has failed to deliver on her promises to “kick-start growth” with her latest Budget, despite the £26 billion of tax increases aimed at increasing welfare spending and strengthening the UK’s fiscal buffer. 

Critics of the Budget say the government provided little pro-growth stimulus, apart from avoiding measures such as increased taxes on banks. At the same time, they said the costs are hitting companies hard, including a sharp rise in the minimum wage, upcoming bills soon to strengthen the rights of working people, and April’s higher employer national insurance contributions.

Reeves had promised that boosting growth would be a “national mission” for Labour. But many executives said they saw little sign of that ambition in her plans.

Andrew Murphy, chief executive of toy retailer The Entertainer, called the wide range of tax-raising policies “the least bad that it could be,” adding that it was “bloody exhausting digesting this smorgasbord of stuff compared to the promises of big reform and big ideas [Labour] gave when they came in.”

Shevaun Haviland, Director-General of the British Chambers of Commerce, was not pleased with the Budget, noting that it fell short of providing a more compelling blueprint for delivering transformational growth.

A FTSE 100 board director likened the Budget to “a debt restructuring rather than an equity story,” noting a lack of positive sentiment. A FTSE 250 chief executive added: “There is nothing for growth in this Budget; the only thing they have done is increase the size of the public sector again, which is not the side of the economy responsible for growth.”

The Office for Budget Responsibility echoed this sentiment, saying none of the new policy measures were significant enough to adjust its outlook for potential growth. 

Rising costs are hitting small businesses and retailers

Retailers were among the sectors most dissatisfied with the result. However, after pressing ministers to scrap plans for supermarket premises to be placed within the top business-rates band, the Treasury chose a lower-than-expected multiplier instead. 

Still, by lowering the tax burden on large premises, the government will now allow for a proportionally smaller and longer-lasting discount for smaller retail, hospitality and leisure enterprises. Alex Probyn at tax firm Ryan said this would see business-rate bills for small shop owners increasing by 40% to 65% next April, with the discount falling from 40% to around 11%. SMEs would be “disappointed to hear that their bills are going to be higher than thought,” said Craig Beaumont of the Federation of Small Businesses.

The gambling industry faced the most direct tax rise, with the remote gaming duty on online casino and roulette games jumping from 21% to 40%, alongside increases to other levies. Companies including Flutter, Entain, Evoke, and Rank Group estimate a combined £790 million annual hit to earnings once the measures are fully implemented in 2027, warning that they will be pushed into deep cost-cutting, which threatens jobs and physical venues.

The Treasury had urged companies to act positively if they were spared harsher taxation ahead of the Budget. Lloyds, Barclays and HSBC — which avoided additional bank taxes — quickly announced billions in new financing for UK businesses and reductions in mortgage costs. 

The Chancellor promotes a stamp duty holiday to attract investors

Reeves sought to reinforce confidence during a drinks reception with senior City executives on Wednesday evening, arguing that expanding her fiscal headroom was a signal of restored stability. She also promoted a new stamp duty holiday for shares in newly listed London companies, encouraging attendees, including figures from NatWest, Lloyds, Goldman Sachs and Deutsche Bank, to help present the Budget favorably to investors.

In a bid to win over City figures — who included executives from NatWest, Lloyds, Goldman Sachs, and Deutsche Bank — to sell the Budget to investors, she also promoted a stamp duty holiday for shares in new company listings on the London stock market.

According to one attendee, the mood was “more positive and warmer than expected.” At the same time, another said it was “an obviously tricky Budget that seemed to have landed OK with the market so far,” though some hoped for stronger signals on spending discipline.

At the same time, Alex Depledge, the government’s entrepreneurship adviser, praised measures aimed at supporting founders through tax relief. “Everyone accuses Labour of not having a growth story,” she said, “but this support for our scale-ups is part of the growth story — we need to back founders taking risks and driving IP and R&D, because that’s where good jobs and growth come from.”

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