Autumn Budget 2024: how did UK businesses react?

On the morning of 30 October 2024, ahead of the Budget announcement, the front page of City AM struck an ominous tone: ‘Firms braced for budget shocker’. The cover story, based on data from Savanta’s UK Business Tracker, revealed that business leaders were most likely to feel ‘concerned’ (25%) and ‘apprehensive’ (22%) ahead of the Budget, with just one in five (20%) feeling ‘positive’.

Decision makers tentatively positive about Budget impact on their business

Yet, in the weeks following the Budget, UK businesses have reacted with tentative positivity. Savanta’s monthly Business Tracker of 1,000 decision makers reveals that businesses were more likely to say the Budget will improve the outlook for their business than worsen it (39% vs. 30%). A quarter (27%) say it will make no difference.

More broadly, business optimism bounced back in November following the Budget announcement. Two in five (41%) businesses said they were optimistic about the impact of the Labour Government on their business, up from 34% in October.

A similar proportion (40%) said they were optimistic about Labour’s impact on the UK economy, up from 36% in October. These insights reveal a much more nuanced picture of the business reaction to Reeves’ Budget than that suggested by her opponents.

Small businesses continue to feel left out

Not all businesses, however, feel as optimistic about the impact of the Budget on their organisation. Response to the Budget varies by business size, with small businesses (up to 249 employees) notably less optimistic than their medium and large counterparts (250+ employees).

Only one third (33%) of small businesses support the measures announced in the budget, compared to 59% of medium and large firms.

Ultimately, small business decision-makers do not feel the budget goes far enough in supporting them, with 62% saying that the Budget did not contain enough measures to support businesses like theirs (vs. 54% of medium and large businesses).

In this sense, small businesses have reacted similarly to the Conservative’s final Budget statement in March 2024. Whilst the Government has changed, small businesses continue to feel unsupported. This should act as a notable early warning to the new UK Government.

NI contribution increase hits larger firms

The adage goes no o business responds positively to additional taxation, and Savanta’s research bears this out. Over half (54%) of company leaders say the increase to employer national insurance [NI] contributions ‘hurts businesses like mine’.

Despite their support for the Budget as a whole, this sentiment is strongest among medium and large businesses (63% vs. 50% of small businesses) with more employees and, therefore, a higher NI burden.

Asked how they will respond to this increase, a quarter (24%) of businesses said they will pass the cost to their customers, the most common response.

A foundation for Labour, but businesses big and small remain wary

These insights paint a mixed picture for the Government. The overall business reaction is tentatively positive in the context of pre-Budget concern and apprehension.

Yet Labour faces an ongoing challenge to convince small businesses that it represents their interests, while larger firms are concerned about the impact of employer NI contributions, a flagship fiscal policy.

About the Savanta Business tracker

Our monthly (UK) and quarterly trackers (Europe) monitor the recovery, resilience and adaption of businesses. Whether you want to understand the latest pressures and challenges impacting businesses on a regular basis or just ask a couple of questions to support your decision-making, our monthly tracker provides a timely and cost-effective approach.

To find out more contact our dedicated team of B2B experts.