Business leaders are anxious as the chancellor prepares to announce her second Budget. Last year, companies were hit hard by big tax increases, including a £25bn rise in National Insurance and a large jump in the minimum wage.
Many firms are still struggling with these costs. Confidence among CEOs and finance bosses has been falling for months, and most surveys show growing concerns.
So, what can business owners expect from Rachel Reeves?
It is almost certain that taxes will rise again. This will take money out of the economy. The research firm Capital Economics thinks the Budget could reduce GDP by 0.2% in 2026 — a serious impact for an economy that only grew 0.1% in the third quarter this year.
However, as the government tightens spending, the Bank of England is likely to soften the blow by cutting interest rates. Lower rates make borrowing cheaper, encouraging people and businesses to spend more.
For businesses, part of the government’s message will be about what it won’t do: no shock tax increases and no new wide-ranging tax hikes.
Rain Newton-Smith, head of the CBI business group, said, “Stability is the only road to growth,” and warned the government not to add more taxes on businesses.
Speaking at the CBI’s conference, she said the government must make “hard choices for growth now,” and choose one or two major tax changes instead of many small increases.
In her words: “It means one or two broad tax rises, rather than death by a thousand taxes.”
What might be included in the Budget?
Business rates are a major complaint. Many companies have seen their bills nearly double after a pandemic discount was reduced from 75% to 40%. The chancellor has promised reform, so she might make the current discounts permanent and fix the sudden jumps in rates when small businesses grow. This could be funded by raising rates for the biggest retail properties.
Business Secretary Peter Kyle also announced a few business-friendly plans at the CBI conference.
He said electricity bills would be cut for 7,000 UK businesses. He also said the British Business Bank will focus its loans on the eight high-potential sectors highlighted in the industrial strategy.
He told the audience:
“Real growth comes from enterprise and wealth creation. We will build a pro-business, pro-growth Britain. This week’s budget will make the fair and necessary choices to support that.”
The chancellor is also expected to highlight the upcoming Planning and Infrastructure Bill, which she has called “probably the biggest thing we will do this parliament.” This bill is meant to remove barriers that slow down growth.
Bank profits look like an easy place for the government to raise money, and there have been mixed signals about whether taxes on banks might increase. But some ministers worry that higher bank taxes would send the wrong message, as the government wants to appear pro-growth and pro-investment.
The Treasury may also cut the payments it sends to the Bank of England to cover losses from selling government bonds that were bought during the pandemic and financial crisis. If these payments fall, commercial banks will also get less money. Banks would see this as a tax increase, even if it is not called one.
The oil and gas industry is strongly pushing for relief from the “windfall tax” on their profits. They argue that oil prices are low, so there are no extra profits to tax. They also say investment in the North Sea is dropping quickly, which affects refineries and chemical plants, and that tax relief could help protect jobs.
The extra 38% windfall tax—on top of the industry’s usual 40% rate—is set to end in 2030, but it could be removed earlier.
Business leaders are also worried about the government’s new Employment Rights Bill. It would give new workers sick pay and protection from unfair dismissal from their first day on the job.
Rain Newton-Smith told the CBI conference that the government should rethink the bill and that businesses’ concerns are not being heard.
So far, the government has shown no sign of changing course. However, Minister Kyle told MPs that there will be 26 consultations on how the new rules will be put into practice.
The business secretary told that any changes to employment law will be designed to help both businesses and workers. “We do not see this as a zero-sum game,” he said.
Conservative leader Kemi Badenoch criticised the bill, saying it would let new employees file complaints with an employment tribunal “before they even know where the toilets are.” She argued this would make hiring slower, riskier, and more expensive.
The chancellor is also expected to talk in the Budget about giving consumers the “confidence to spend.”
Some business leaders think this could mean another rise in the national living wage, higher than inflation. This usually leads to increases in other salaries within companies too.
Another policy that will affect both employers and employees is a cap on salary sacrifice schemes, which let workers pay part of their salary into their pension before tax. These schemes are common in large companies, and many worry that limiting them will lead to less generous pensions in the future.
Restoring confidence
The government wants businesses to feel that it supports them. It wants to show that businesses will not face the same heavy demands as before and that where possible, they will even get some help.
After months of waiting, many businesses may feel relieved.
A Barclays survey shows that 55% of business leaders are delaying investment decisions until after the Budget. But 43% say they expect to invest more once they see it — a sign that optimism may return.
Even so, confidence remains fragile, and the chancellor will need to be careful.
Published: 25th November 2025
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