4 November 2025

SMEs cut costs and delay hiring ahead of Budget

 

  • 40% of small and medium sized businesses (SMEs) across the UK have made or are considering strategic changes ahead of the Budget
  • A third have cut costs or restructured, while nearly as many have paused hiring
  • Nearly half (46%) believe this year’s Budget will be bad for business
  • 70% fear tax rises, and 62% say the government doesn’t understand SME needs

 

Pessimism over the upcoming Budget is already influencing SME decision-making, with many businesses taking pre-emptive action according to Rathbones, one of the UK’s leading wealth and asset management groups.

In a poll of over 1,000 founders, owners, and senior executives of small and medium sized businesses, Rathbones found that 40% have made or are considering strategic changes in anticipation of the Budget. Among those who have already acted, almost a third (32%) have cut costs or restructured, while 31% have delayed hiring.

Not all changes have been defensive - around 30% have expanded into new markets or regions, and 29% have launched new products or services to strengthen their position ahead of potential policy shifts.

The underlying cause of this strategic shift is widespread concern about tax increases. 70% of respondents identified rising business taxes as their biggest worry, with one in eight (12%) fearing increased regulation and one in seven (14%) reduced support from the government.

The survey found nearly half (46%) believe this year’s Budget will be bad for business, with only one in five (22%) saying they expect a positive Budget for businesses. More than a third (35%) believe income tax is one of the two areas most likely to be targeted for increases, with 24% pointing to capital gains tax or VAT.

The research also reveals a growing disconnect between SMEs and the government. 62% of respondents feel the government does not understand the needs of entrepreneurs and SMEs. Among founders and entrepreneurs, that figure rises to 82%.

Ade Babatunde, Senior Financial Planning Director at Rathbones, says: “These numbers reinforce what we hear from business owners and senior executives, who are clearly very concerned about the Budget and its implications for their businesses.

“Many are worried about a repeat of last year’s Budget, which saw increases to Employers’ National Insurance, and preparing for the worst. The government has spoken at length about the importance of getting Britain growing, but as yet has offered very little to help those starting and seeking to build businesses, such as tax relief, targeted support, or policies that reflect the realities of running a small business today.”

When asked what they most want from the Budget, 44% of SME leaders called for no new taxes, 43% hoped for cuts to business taxes, and 37% wanted a reduction in business rates.

Rathbones has extensive experience working with business owners, entrepreneurs and family-run businesses, through over 20 offices across the UK. For more information, visit Rathbones’ Wealth management for entrepreneurs and business owners hub.