Business leaders are anxious as the chancellor prepares her second Budget. After last year’s heavy blows — including a £25bn rise in National Insurance and a big increase in the minimum wage — many firms are still coping with higher costs. CEO and finance chief confidence has been weakening for months and surveys show rising concern.
Taxes are widely expected to rise again, which would withdraw spending power from the economy. Research firm Capital Economics estimates the Budget could shave about 0.2% off GDP in 2026 — a meaningful hit for an economy that grew only 0.1% in the third quarter. To offset tighter fiscal policy, the Bank of England may ease monetary policy by cutting interest rates, which would lower borrowing costs and could help households and businesses spend more.
The government will want to signal that this Budget won’t deliver sudden, wide-ranging shocks. That message — no surprise tax hikes and no sweeping new levies — is aimed at calming firms. Rain Newton-Smith, head of the CBI, argued stability is essential for growth and urged ministers to avoid piling on business taxes. She advised choosing a small number of significant measures rather than many incremental increases.
Possible measures affecting firms
– Business rates: One of the biggest complaints from companies is volatile and rising business rates. Many saw bills nearly double after pandemic discounts fell from 75% to 40%. The chancellor has promised reform; possible moves include making current discounts permanent and smoothing sharp rate jumps when small businesses expand. Any relief might be paid for by higher charges on the largest retail properties.
– Support announcements: Business Secretary Peter Kyle flagged a few business-friendly steps at the CBI conference, promising electricity bill cuts for about 7,000 UK firms and directing British Business Bank lending toward eight high-potential sectors in the industrial strategy. He framed the Budget as making “fair and necessary choices” to back enterprise and growth.
– Planning and infrastructure: The chancellor is likely to highlight the Planning and Infrastructure Bill — described as one of the biggest items this parliament — intended to remove planning barriers that slow development and investment.
Sector and tax specifics
– Banks: There are mixed signals over whether the government will raise taxes on bank profits. Some ministers worry higher bank levies would undermine a pro-growth message. Separately, the Treasury could reduce payments it makes to the Bank of England to cover losses from historic bond purchases; that would lower returns to commercial banks and be seen by banks as an implicit tax increase even if not called one.
– Oil and gas: The industry is lobbying to ease the extra 38% “windfall” charge on top of the usual 40% rate, arguing that low oil prices mean no excess profits and that higher taxes are discouraging North Sea investment. The additional levy is set to end in 2030 but could be cut sooner.
Employment and workplace rules
Business leaders are uneasy about the Employment Rights Bill, which proposes that some new hires would get sick pay and protection from unfair dismissal from day one. The CBI has called for reconsideration, saying firms’ concerns aren’t being heard. The government says it will run 26 consultations on implementation and that changes are meant to help both workers and employers — “not a zero-sum game,” as the business secretary put it. Critics on the right warn such rules could deter hiring and make recruitment riskier and costlier.
Wages, pensions and household spending
The chancellor will also aim to boost consumer confidence to support spending. Some business leaders expect another rise in the national living wage, possibly above inflation, which would push other pay rates up too. A proposed cap on salary sacrifice arrangements — commonly used in large firms to route pay into pensions tax-efficiently — could reduce future pension generosity and is a source of concern for employers and employees alike.
Restoring confidence
Ministers want to reassure firms that they will not face the same heavy demands as before and that targeted help will be available where possible. After months of uncertainty, many businesses may feel relieved if the Budget emphasises stability and practical support. A Barclays survey found 55% of business leaders are delaying investment decisions until after the Budget, but 43% expect to invest more once they see the plans — suggesting the Budget could unlock some capital spending if it restores confidence.
Even so, sentiment is fragile. The chancellor will need to balance fiscal tightening with measures that avoid further damaging already weak business confidence.
Published: 25th November 2025
