On Wednesday, 26 November 2025, Chancellor Rachel Reeves delivered her much anticipated budget statement. But what does it mean for business? As someone who works for an organisation advising and supporting over 3,000 ambitious SMEs across the UK, to support innovation and to help drive local economic growth, I was looking for three key things.
I was looking for the following:
- A fiscal settlement that signals stability in the government finances and limited further changes to rules and taxes that disrupt an SME’s ability to plan and invest in their future growth.
- Measures that minimise harm to SMEs and avoid adding unnecessary costs, while ideally providing encouragement and support for entrepreneurs and innovators.
- Reinforcement of the government’s Industrial Strategy as expressed through funding for initiatives that strengthen priority sectors and regions in the form of clusters, innovation districts, catapults and similar.
Key measures and their impact on SMEs
The main observations that I would make are:
Stability:
This sounded like a serious minded budget, with suitable reflection of business and economic needs, to which the reaction of markets appears to be modestly positive. This is in itself a great benefit for businesses and their investment plans. It may not have been strongly ‘growth oriented’, in terms of new investment and cash, but many small businesses are looking above all for stability in order to invest and plan for the future. I think and hope that it will turn out to have scored well on this.
Broadening eligibility rules for investment in innovation:
There were mentions of smaller businesses and their needs in the budget statement, all of which were broadly positive. These included significant extensions to the EIS eligibility rules making it easier for innovative firms to raise more funding under tax-alleviating conditions. It even extended to adjustments to broaden EMI option award for early stage businesses. However, there seems like a missed opportunity here to help the smaller pre-profit businesses by allowing them to award EMI options to advisors and non-executives. This feels like something that could easily be added for advisors with formal NED or advisory contracts. Overall, I thought this section of the budget was helpful and indicative of some good understanding of the challenges for innovative businesses of raising the finance they need to grow.
Apprenticeship training:
Fully funding apprenticeship training (for those aged under 25) for SMEs is a welcome initiative, which could revive a system that has in recent years not worked for SMEs at all. One can only welcome something that should be good for SMEs looking to be able to develop young people, grow their own staff and address skills gaps.
Reducing energy costs:
Initiatives to reduce energy costs will benefit SME manufacturers, for whom energy is often a top three expense and something that can damage their competitiveness in international markets. This is a small step towards levelling that playing field but more could be done.
Minimum wage increase and the Employment Rights Bill:
There were some modest changes which will cost businesses more, but these are small in comparison to the impact of the National Insurance (NI) threshold reductions and rate increases earlier this year. The national minimum wage increasing to £12.71 for those aged 21 or over and £10.85 for 18-20 year olds in April 2026 will add some pressure as higher entry-level wages can ripple through pay structures. However, the administrative burden of measures like the Employment Rights Bill, may be a bigger concern financially than salary sacrifice schemes. The news shortly after the budget that there will be a 6 month period (not day 1) for accruing unfair dismissal rights will definitely defray some of the fears that SMEs would have had about taking a chance on new employees and so be good for their growth.
AI and digital adoption:
There was significant emphasis on AI and the need for greater adoption of technology, which was to some degree backed by investment and initiatives. AI will be a defining technology of our times, reshaping productivity, jobs, new products and services; encouraging businesses to embrace it rather than resist it, is clearly the right approach. This budget signals that intent. I continue to feel that there is insufficient investment in the mechanisms for diffusion to SMEs of AI as a valuable tool for their business.
Conclusion
Overall, this budget feels a lot more positive than I had feared. Personally there are many things in the budget that will probably make me worse off, but on initial glance the businesses that we work with should not be materially harmed and there are indeed grounds for optimism. Stability is the biggest win in this budget.
David Crichton-Miller, Group CEO
