Budget reaction: business leaders on growth opportunities and misses

Yesterday’s Spring Budget announcement needed to show a bold mix of policies in order to capture a crucial business vote, and to set the stage for an election year long in the making. It was the Chancellor’s opportunity to posit the Conservatives as the “party of growth” – a hotly contested association, these days.

As ever, some of the more headline-grabbing policies were known well in advance of the Budget day itself. The 2p cut to National Insurance contributions caught most of the attention, even before Jeremy Hunt had revealed his full hand. And, the business community knew full well that a much maligned change to the definition of high net worth individuals was being reversed, following a deserved backlash over how exclusionary it would be to female investors.

Further policies caught the eye on the day, too. There’s real appetite for the potential of the Mansion House reforms becoming a reality, seeing huge investment pots made available from pension savings, for the benefit of startup businesses and early stage UK innovation. There’s also been a warm reception to the stated commitment to AI investment, though calls are well underway for a strategic roadmap for supporting AI-upskilling of the UK workforce, too – something, as yet, unmentioned by the Chancellor.

We’ve rounded up a selection of UK business leaders to gather their thoughts and feedback on the final Budget before the starter’s pistol is fired on the coming election…

“The Chancellor missed a £94bn opportunity for SMEs”

“It’s widely accepted that today’s Budget will be one of the last fiscal events before the general election. While it was encouraging to see the Chancellor announce plans to tackle public sector productivity, it was disappointing that private sector productivity is still missing from the top of the political agenda.

“With UK productivity lagging so significantly behind our G7 counterparts, stimulating demand for productivity-enhancing measures among the 5.5 million SMEs that make up 99.9% of the UK business population has never been more crucial. In fact, if every micro, small and medium business were able to maintain a 1% improvement in productivity over a five-year period, this would add £94 billion to the UK economy annually.

“It is perhaps because of the government’s lack of focus on SMEs that our research has identified that business leaders, who may have traditionally favoured the Conservatives, no longer consider the Chancellor’s party to the be self-styled party of business.”

Anthony Impey MBE, CEO of Be the Business

“Provide more support for scaling up, or we won’t be able to compete with the US”

“We are pleased with the vision set out in the Budget today. However, for the UK to truly rival Silicon Valley, it must create the conditions for disruptive innovation by building the skills pipeline and ensuring businesses have access to talent.

“We urge the government to provide more support for scaling up. Without this investment, we won’t be able to compete on a global stage – especially with the US due to the size of the market and the size of their capital. The UK needs to pivot from being a startup nation to a scale-up nation.”

Jie Zhou, Innovation Manager of the Canopy, Cambridge Institute for Sustainability Leadership

“The Mansion House reforms will foster an environment that bolsters fast-growth companies”

“The UK has been sleeping on a significant pool of capital for too long. It’s great to see Chancellor Jeremy Hunt recognise the potential that pension funds hold, and we welcome the new investment and innovation opportunities that this will bring.

“The Mansion House reforms will foster an environment that bolsters fast-growth companies, unlocking enormous potential for innovation that will stand the UK in a solid position for AI leadership, as early-stage startups are encouraged to remain on home soil.

“The potential of these pots is significant, and Anne Glover has already stated that even a small portion of larger funds’ total assets would deliver better returns for investors compared to the current conservative approach. The win is three-fold – startups are supported and the funding gap is plugged, pensions themselves will be bigger for us in the future, and local economies will be driven by innovation.”

Roi Amir, CEO at Sprout.ai 

“Will investments be made with long-term, mutually beneficial gains in mind?”

“With the Mansion House reforms, it will be interesting to see how this new investment form is approached going forward. Specifically, whether investments will be made with long-term, mutually beneficial gains in mind, rather than the short-term sprint for revenue as with angel and venture capital investments.

“Of course, this is a good start to unlocking potential, but to make the most of it, the government needs to consider specific incentives to encourage investment in unlisted companies, so they have the opportunity to grow.”

David Holt, Partner and Solicitor at Potter Clarkson 

“What happens to the Recovery Loan Scheme when we get to 2026?”

“The Recovery Loan Scheme has been a vital lifeline supporting start-ups to scale and succeed in the UK. It’s extremely positive that the government has invested £200m and extended this until 2026.

If we can encourage more investment in small businesses across the UK, we encourage further diversity and growth across the small business eco-system.

The next question is, what happens when we get to 2026? Hopefully there are plans in place to tackle this sooner and continue to help the start-up community.”

Andy Fishburn, MD, Virgin StartUp

“Pisces follows similar markets created in the US about a decade ago”

“The creation of new secondary markets for private companies through the Private Intermittent Securities and Capital Exchange System (Pisces) is an interesting development, which follows similar markets created in the US about a decade ago.

“For high growth and venture backed companies, many will see this as an opportunity given the dip in valuations over the last 2 years which has led to many investors wanting to get liquidity as a full exit seems further away.

“This also follows the trend of increasing secondary possibilities, with many crowdfunding platforms opening up secondary markets and a number of prominent VCs raising secondary only funds.

However, the recent furore over Carta’s secondary platform shows that most private companies still want to tightly control secondaries, which we expect means they will take a cautious approach to Pisces.”

David Strong, Head of Venture Capital and Partner at Marriott Harrison

“The Chancellor has sent a positive signal about the UK’s commitment to AI”

“While there’s optimism that AI could be the driving force in the UK’s economic recovery, there’s a pressing need for more to be done around retraining the workforce, at all levels.

“For many businesses AI presents a golden opportunity, but its deployment is being held up due to skill shortages and a lack of strategic planning. Without the right technical expertise, organisations struggle to implement AI initiatives effectively, which stalls development and any potential productivity gains that it has to offer.

“The Chancellor has sent a positive signal about the UK’s commitment to AI. Offering tax incentives and increased funding for company upskilling initiatives can build on that momentum and help bridge the knowledge gap. Allowing companies to deduct the cost of AI training from their capital investments, alongside initiatives targeting AI competencies at the executive level, would minimise the financial burden and incentivise digital transformation.

As AI reshapes industries, it’s crucial that businesses receive the support they need to stay competitive. The responsibility largely lies with the government to facilitate this transition.”

Nikolaz Foucaud, Managing Director, Coursera EMEA

“Channel this momentum to continue pushing for real change in favour of women-led businesses”

“By reversing legislation on the definition of high net-worth individuals that would have disproportionately affected female entrepreneurs and female angel investors, the government has listened to the voices of women in business and acted swiftly.

“My hope is that we channel this momentum to continue pushing for real change in favour of women-led businesses in terms of funding.”

Emma Sinclair MBE, Founder and CEO of Enterprise Alumni

“Any changes to investor rules need careful consideration”

“It’s great to see the government responding to feedback and reversing recent changes to rules around high net worth and sophisticated investor exemptions. The changes risked reducing investors’ ability to back small UK startups, very much the opposite of current government policy, and implementation has also been poor.

However, the government has said that the exemptions remain under review. With angel investing changing substantially since the current criteria were originally introduced, some future changes would not be a surprise.

“The lesson from today is that any changes need careful consultation and a joined-up approach across government if they’re going to be deliver the intended benefits without unintended consequences.”

Nicholas Hyett, Investment Manager at Wealth Club

“The reversal of the angel investment threshold is fantastic news”

“There are common myths surrounding angel investing that put women off. It’s believed you have to either be extremely wealthy, an exited entrepreneur or from a private equity background. This is not the case.

The reversal of the angel investment threshold is fantastic news. In a nutshell, if you have more women angel investing, it means more money for female founders.

“We need more intelligent people, who have achieved success in their career or who own a business and therefore have the financial capacity to angel invest in our ecosystem.”

Sarah Turner, Home Grown Ambassador and CEO & Co-Founder at Angel Academe

“There is pent up demand for lab space”

“It’s extremely encouraging to see the Chancellor highlighting both tech entrepreneurs and Cambridge in his Budget, recognising the potential for Cambridge to continue to be a major centre for science and technology and driver of economic growth.

“There is a pent-up demand for lab space and for high quality spaces for innovators and the tech community to gather. Cambridge Tech Week taking place this year in September is the ideal opportunity for the Chancellor to come and see what a hotbed of innovation Cambridge is and I invite him to attend to see what is needed to make the area a hub for innovation in the UK.”

Chris Bruce, Chairman of Cambridge Tech Week

“The government should create a new R&D strategy”

“We need the government to redouble its efforts on R&D. This includes creating a new R&D strategy that underpins partnerships between firms, higher education institutions, and government and takes the UK’s spending on this critical area to the G7 average by 2030.

“We also need the government to coordinate an annual national R&D conference to boost cooperation and commit to permanent expensing from all parties – enabling increased private sector research spending.”

John Hartley, CEO of Levidian

“We risk a scenario where UK companies begin outsourcing their R&D practices to reduce costs”

“Despite reforms to R&D tax credits being made at last year’s Autumn Budget, these were never truly put into practice.

“That’s why this Spring Budget was so important for startups – but Jeremy Hunt unfortunately neglected to mention these changes. HMRC’s handling of R&D relief has put unnecessary pressure on startups across the country – laying a significant financial burden at the feet of many early-stage businesses.

“Today, these companies needed clarity on the reform promised around the administration and implementation of these taxes. Not doing so means that startups will continue to struggle and we risk a scenario where UK-based companies begin outsourcing their R&D practices to reduce costs.”

Seb Wallace, Investment Director, Triple Point 

“The government needs to set clear and comprehensive green policy targets”

“It’s encouraging to see the Chancellor committed to providing investment into offshore wind and carbon capture and storage (CCS).

“But, for budgetary measures to deliver any value, the government needs to do the fundamental work of setting clear and comprehensive green policy targets and committing to them.

“Investors are not looking for handouts, but for a clear policy framework and predictability in the way political commitments are carried through.”

Sebastian Peck, Managing Partner, KOMPAS VC

“The government is creating a self-inflicted vacuum of both revenue and great entrepreneurs who will inevitably go elsewhere”

“More must be done to help the hospitality sector fully recover. There needs to be a reduction in the VAT threshold to match the rest of Europe if they want to see the sector remain as such a significant contributor to domestic GDP and employment.

The government is creating a self-inflicted vacuum of both revenue and great entrepreneurs that will invariably go elsewhere.”

Conor Sheridan, CEO & Founder of Nory AI

“Millions of people will receive another boost to their pay packet”

“The chancellor alluded to the potential for a complete scrap of National Insurance which would be revolutionary, albeit once the government can afford it. For now, a further 2% reduction to national insurance will be seen by many as a cynical bribe as we approach election season.

“However, this isn’t to be sniffed at as millions of people will receive another boost to their pay packet in the midst of a cost of living crisis. Combined with the NI reduction that came into force in January 2024, this could produce a saving for workers of up to £1,500 per year.”

Tom Adcock, Tax Partner at Gravita

“The National Insurance cut will do nothing to alleviate the real challenges and struggles”

“The Chancellor’s move to cut National Insurance contributions in the Budget will inevitably grab the headlines. In reality, from a business and employer perspective, its impact is unlikely to be in any way significant or alleviate the current challenges faced by employers, particularly around recruitment, retention and the pressure around pay increases.

“A drop in National Insurance contributions with a typical saving of a few hundred pounds a year will do nothing to alleviate the real challenges and struggles faced by employers in the workplace of today.

“Such a limited source of financial aid in the context of rising living costs, energy prices and inflation will mean that this feature of the Budget (or indeed any other feature) will not make any real difference to people’s circumstances, their personal budgets and financial stability. So, many employers will still be facing pressure to increase salaries to mitigate against the current financial landscape.

David Walton, Partner and Head of Employment Law at Primas Law. 

“It’s an unfortunate truth that war drives technology breakthroughs”

“The UK’s unwavering financial and humanitarian support for Ukraine has enabled the nation to defend itself against an illegal invasion and war. How the £2.5bn additional commitment for 2024-25 is deployed into military expertise and defence production will key to turning the tide of the war.

“To help Ukraine now in its time of crisis but to also rebuild once the war is over the focus needs to be on DefenceTech and AgriTech innovation.

It’s an unfortunate truth that war drives technology breakthroughs and I hope the UK will harness, through collaboration, the electronic warfare, drone, and reconnaissance expertise that is developing on the ground in Ukraine to deliver what is needed at scale.

“The Chancellor spoke of the need for greater efficiency through innovation in public services and the same very much applies to Defence policy and the bodies that work closely with the MoD to procure and manufacture battlefield-ready products.”

Andriy Dovbenko, Principal and Founder, UK-Ukraine TechExchange

“Extending the full expensing tax break can only encourage entrepreneurs”

“It’s very positive to see plans announced by the UK government to boost investment in our national tech scene.

“Extending the full expensing tax break can only encourage more entrepreneurs to launch, grow and list their businesses here, and the combination of £110m in levelling up funding and more pension capital flowing into our tech industry will ensure the UK retains its position as the leading innovation and investment hub in Europe.”

Mike Smeed, Managing Director, InMotion Ventures