The Eye of the Storm? 

When I last wrote an article following the delivery of Rachel Reeves’s first Budget speech, I prophesied stormy times ahead for British business; and whilst I have neither seen, nor heard, anything during the intervening six months that might cast doubt over the reliability of my barometer, you could be forgiven for thinking it was wholly defective, IF the rosy forecast delivered by the Chancellor in her Spring Statement is to be believed…

On Wednesday, unburdened by any culpability for the downgrading (by half) of economic growth forecasts for 2025 and, safe in the knowledge that anything that has not gone entirely accordingly to plan thus far is the fault of:

• increased global uncertainty; or
• the war in Ukraine; or
• the previous Government; or
• all of the above,

Mrs Reeves chose to wax lyrical about her successes in restoring stability in public finances, increases to defence spending and the OBR’s upgraded growth forecasts for 2026 onwards. The future certainly looks bright, does it not?! 

Unfortunately, I fear this sunny outlook may be short-lived, as the Chancellor’s forecasts seem to have ignored the incoming area of low pressure taking the form of the Deputy Prime Minister’s overhaul of workers’ rights; the economic effects of which are expected to be less than positive and have not yet been reflected by the OBR in their revised growth forecasts referenced above.

While Angela Rayner’s reforms aim to create a fairer workplace, they bring a surge in red tape for businesses already burdened by rising employers’ NICs and wage hikes from the Autumn Budget.

The Employment Rights Bill, which is due to take effect in 2026, is also likely to have a disproportionate impact on smaller businesses, such that if the aforementioned Budget measures hadn’t already put paid to future recruitment by these smaller employers, Ms Rayner’s reforms almost certainly will.

It is difficult to see how less flexibility and increased red tape for businesses will have anything other than a negative impact on future unemployment and economic growth, which makes me nervous that we can’t rule out yet further increases to taxes in this year’s Autumn Budget speech, as the Chancellor will need repair any resulting damage to public finances and the UK economy… all of which makes for very unsettled weather conditions over the coming months, as we ride into, what I fear may be, the eye of the storm.