Autumn Budget 2025 Predictions: What UK SMEs Can Expect

With the Spring Budget 2025 now behind us and a rocky road ahead, UK SMEs are facing significant challenges. Rising costs, shifting tariffs, and a slowing global economy have left many businesses uncertain about the future. As we approach the Autumn Budget 2025, it’s essential for SMEs to understand the landscape and prepare for what’s ahead.

The Economic Landscape: A Tough Road Ahead

The UK economy is projected to grow by just 1.3% in 2025, down from earlier estimates, with the OECD forecasting slower growth throughout the next two years. Inflation remains a key concern, currently standing at 3.8% in mid-2025, driven largely by food and energy prices. While inflation is expected to gradually decrease to the 2% target by 2026, its impact on business margins is ongoing.

At the same time, the UK is navigating the aftermath of Brexit, with customs duties and trade barriers continuing to affect cross-border trade. The EU remains a crucial trading partner for many UK SMEs, but businesses are still adjusting to new tariffs and regulatory complexities. These changing dynamics make the road ahead even more uncertain.

What to Expect from the Autumn Budget

The Autumn Budget 2025 is expected to focus on fiscal responsibility rather than immediate relief for businesses. With the government’s borrowing costs increasing—public debt is projected to reach 104% of GDP by 2026—large-scale tax cuts are unlikely. However, there may be some targeted measures aimed at addressing specific fiscal gaps.

Key areas of focus are likely to include:

• Tax Reforms: The government is expected to introduce tax reliefs for certain sectors but may increase taxes in other areas, such as salary sacrifice schemes or property taxes.
• Defence and Infrastructure Investment: The UK government is committed to increasing spending on defence (2.5% of GDP by 2027) and regional infrastructure (a £15.6 billion transport plan), although these investments won’t provide immediate relief for SMEs.
• Changes to Tariffs: Post-Brexit tariffs and regulations will continue to affect trade with the EU, especially in sectors like manufacturing, where raw material costs have surged by over 20% in the past year alone.

For SMEs relying on imports from Europe, these supply chain disruptions will likely persist, making it more difficult to predict pricing or availability of key materials.

Preparing for the Future: What SMEs Can Do Now

In light of these challenges, SMEs must focus on building financial resilience and maintaining operational flexibility. The Autumn Budget may not offer much in the way of immediate support, but there are several strategies SMEs can implement to better navigate the uncertain future:

1. Optimise Cash Flow Management

Effective cash flow management is crucial for SMEs facing high operational costs. Review your business’s current cash flow position, especially in relation to accounts receivable and accounts payable. The Bank of England’s interest rate hikes, currently at 5.25% in an effort to control inflation, mean financing costs are higher, so maintaining liquidity is essential.

To improve cash flow:

• Negotiate better payment terms with suppliers and clients to ensure better liquidity.
• Reassess credit lines and ensure you have access to capital when needed.
• Explore leasing as an alternative financing option. Leasing offers the ability to acquire essential assets, such as equipment or technology, without draining cash reserves.

2. Leverage Leasing to Preserve Capital

With capital expenditure constrained, leasing is an ideal solution for many SMEs. It allows businesses to acquire the equipment, machinery, or technology needed for growth without the upfront capital investment, helping preserve cash flow.

Leasing offers several advantages for SMEs:

• Preserve cash flow by spreading costs over fixed periods, typically with manageable monthly payments.
• Avoid the depreciation risk associated with outright purchasing, especially given the uncertain economic climate.
• Stay flexible: With leasing, businesses can upgrade assets as needed without being tied to outdated technology or equipment.

3. Streamline Operations and Reduce Costs

Cost management will be key to survival in the coming months. The cost of raw materials has increased by as much as 15% in some sectors, particularly in construction and manufacturing. By identifying areas to improve efficiency, SMEs can protect their margins.

Consider the following cost-saving measures:

• Renegotiate contracts with suppliers and landlords to secure better terms.
• Automate processes where possible, from inventory management to customer service, to reduce overhead costs and improve productivity.
• Outsource non-core activities such as IT, payroll, or marketing, which can help free up resources and focus on key business operations.

4. Diversify Revenue Streams

As the economy slows, it’s essential for SMEs to diversify their income sources. Relying on a single market or customer base makes your business vulnerable to external shocks. SMEs should explore new avenues for revenue, whether through new product offerings, new markets, or strategic partnerships.

Here are a few ideas to consider:

• Explore digital channels to reach a wider audience, such as e-commerce or offering services online.
• Expand into new markets, either geographically or by targeting different customer segments.
• Develop strategic partnerships with other businesses that complement your services, helping you gain new clients or expand your product offering.

5. Focus on Supply Chain Resilience

With trade tariffs and supply chain disruptions continuing to affect many industries, SMEs must strengthen their supply chain resilience. Increased logistical costs and delays are likely to continue, which could impact profitability.

Consider taking the following steps:

• Diversify suppliers to mitigate risks in case of future disruptions.
• Build a safety stock of key materials to ensure business continuity.
• Invest in supply chain management technology to improve visibility and forecast demand more accurately.

The Autumn Budget 2025 is unlikely to provide immediate relief for UK SMEs, especially with rising inflation and ongoing economic uncertainty. However, by taking a proactive approach and focusing on cost control, financing flexibility, and operational efficiency, SMEs can weather the storm ahead.

Leasing presents an opportunity for SMEs to preserve capital, manage cash flow, and access essential assets without the burden of large upfront costs. By preparing now, SMEs can remain agile and competitive as they navigate these challenging times.

At Buckingham Leasing, we are committed to helping your business access the right solutions to stay ahead. Contact us today to find out how leasing can support your business in the uncertain months to come.