As businesses across Wales look towards the October Budget, the message from ICAEW members is clear. This Budget is an opportunity for the UK Government to give business the breathing space it needs to deliver growth. While geopolitical events have hit business confidence – and are out of Number 10’s control – this is a chance for the Chancellor to take charge where he can.
The Chancellor, John Healey, has identified investment, innovation and jobs as his three principal objectives. That is a welcome starting point. Wales needs all three, but businesses will ultimately judge the Budget not by the ambition of its language, but by whether it provides the certainty, stability and practical support needed to invest.
Welsh businesses have shown remarkable resilience through a prolonged period of economic disruption. They have faced higher employment, energy and financing costs, alongside labour shortages and an increasingly complex regulatory environment. Many still want to grow, recruit and adopt new technology, but uncertainty can delay or prevent those decisions.
The Chancellor’s commitment to reducing the regulatory burden on UK businesses by 25% by the end of this Parliament is therefore particularly encouraging. However, the target must produce tangible changes. Businesses need fewer administrative obstacles, lower compliance costs and greater coordination across government. Deregulation must not mean weaker standards. It should mean better designed, more proportionate regulation that allows responsible businesses to focus their time and resources on growth.
Tax policy will be equally important. The need to maintain fiscal credibility is real, particularly when government borrowing costs and the cost of servicing the national debt are placing additional pressure on the public finances. But fiscal headroom should not be created through further increases in the taxes borne by businesses.
Companies cannot plan effectively if tax policy changes unexpectedly or if temporary measures are layered on top of an already complicated system. The Budget is an opportunity to fix tax administration by prioritising investment within HMRC, as costs, delays and uncertainty caused by poor HMRC performance hold back businesses looking to invest and grow. -
This tension was explored in ICAEW’s recent Behind the Numbers podcast, hosted by Philippa Lamb. Frances Haque, Chief Economist at Santander UK, David Wooding, political commentator and former Sunday Express editor, and Suren Thiru, ICAEW’s Chief Economist, discussed the Chancellor’s narrowing options as he seeks to encourage growth, balance tax and spending, and reassure the financial markets.
The discussion underlined the scale of the challenge. Higher borrowing costs have reduced the Chancellor’s room for manoeuvre, while large and politically difficult decisions remain around public spending and welfare. As Suren Thiru observed, the Chancellor is effectively juggling immediate pressures on households and businesses, a difficult fiscal position and the longer-term need to improve the UK’s growth performance.
For Wales, one of the most significant opportunities is the Chancellor’s focus on devolution and locally led growth. The announcement that the Cardiff Capital Region will become a strategic partner of the National Wealth Fund could help the region develop a stronger pipeline of investable projects. If implemented successfully and collaboratively, this could unlock capital for infrastructure, innovation and business expansion.
However, growth must benefit every part of Wales. We need investment that connects communities, strengthens transport and digital infrastructure, supports the transition to a lower-carbon economy and enables businesses in rural, coastal and post-industrial areas to participate fully. Wales has significant strengths in advanced manufacturing, energy, food and drink, professional services, technology, tourism and the creative industries. The Budget should create an environment in which these sectors can scale up and compete.
No single Budget can resolve every structural challenge facing the Welsh economy. But October represents an important opportunity to establish a more credible and consistent direction.
A successful Budget for Wales will protect fiscal credibility without undermining business confidence. It will encourage investment rather than penalise it, simplify the environment in which businesses operate and ensure that devolution enables local growth without adding complexity.
Above all, it must turn optimism into action. Wales has the talent, businesses and sectoral strengths needed to make a greater contribution to UK prosperity. What it now needs is a stable framework that gives businesses the confidence to invest, innovate and create the jobs of the future.