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Central Government is going through some significant changes, and these could have a real impact on your business. With department budgets overhauled ahead of the Spending Review in March, we’re likely to see shifts in priorities that will influence policy for the rest of this Government’s term.
In this article, we’ll take a look at what’s ahead of us, from new industrial strategies and growth sectors to the role of government agencies, and discuss how these changes might affect your business.
Central Government is changing - what it means for your business
The new budgets for the government departments are currently being overhauled before the “Spending Review” is announced in March. This may change priorities for individual departments and will inevitably have an impact on policy making for the rest of this Government’s term.
Chancellor Rachel Reeves has committed to a new Industrial Strategy which has highlighted 8 growth sectors. It is highly likely that the schemes which are funded will match these sectors and the initiatives around digitalisation, the drive to carbon-zero, export and increasing labour skills.
We can expect to see a greater role for government agencies such as:
- UK Research & Investment (including Innovate UK)
- The National Wealth Fund,
- UK Export Finance
- The British Business Bank.
These agencies are currently developing their strategies, so we should anticipate new schemes that foster increased collaboration between them, as well as partnerships with private commercial companies to enhance capacity.
At a more local level, resources are being provided to local authorities and city regions for them to offer funding and support to address the needs of the small businesses (SMEs) in their areas.
If you want to directly influence your own area’s objectives, find your local growth hub and see whether they have a Business Advisory Board you can join. If that’s not for you, you could join a mailing list where you can keep up to date with any new initiatives, which may benefit your business.
Looking ahead: what is coming in the Spring Statement?
The Spring Statement is set for March 26th 2025. Previously, these statements have been ‘Budgets’ where we would expect new tax policy and rates changes. However, the Chancellor now plans for such events to only occur annually in the Autumn Budget, so no significant tax announcements are expected this time.
With lower growth predictions for the UK economy and ongoing concerns around inflation, the Chancellor’s stability rules are being tested. However, lower interest rates will be welcomed as they reduce the cost of UK borrowing.
Once she has assessed the full picture, if the balance of these forecasts isn’t overall in her government’s favour, there is an outside chance she will have to make some tax changes after all.
What this means for UK SMEs
One thing is certain: whatever happens, UK SMEs are bound to feel the impact eventually. In the current economic climate, small businesses may face shifts in consumer demand, rising costs, or changes to tax policies that could affect profitability and operations.
While we can’t individually influence these decisions, we can prepare and adjust our strategies accordingly. Stay tuned over the coming months, as we’ll continue to explain how these changes could affect your business.
