Budget 2025: What Can Businesses Anticipate?
As businesses prepare for the upcoming Budget 2025, several key factors are emerging that could significantly impact economic activity.
Projected Economic Impact
Capital Economics estimates that the Budget will reduce GDP by 0.2% in 2026. This decrease follows a particularly sluggish economic growth of just 0.1% in the third quarter of this year. Such a contraction could present challenges for businesses already navigating a fragile economic landscape.
Interest Rates and Spending
In response to the projected fiscal tightening, the Bank of England is expected to lower interest rates. This measure aims to inject liquidity into the economy, encouraging borrowing and spending among individuals and enterprises.
Business Confidence Factors
A senior government adviser highlighted that several crucial elements driving business confidence, such as inflation, are anticipated to decline next year. This could foster a more favorable environment for investment and growth.
What Businesses Should Expect
As the government prepares the 2025 Budget, certain expectations are emerging:
- Rise in taxes, which could constrict disposable income.
- No sweeping tax increases, with a focus on stability.
- Encouragement from interest rate cuts to promote spending.
Overall, businesses are hopeful that the chancellor will mitigate negative impacts while accentuating positive developments in the economy. Managing expectations will be crucial as stakeholders await the final details of the Budget 2025.
