The headlines around the Autumn 2025 Budget delivered by Rachel Reeves concentrated on strategic spending focused largely on welfare, financed by a substantial £26 billion tax increase. While the markets registered a muted response (which is a form of approval) and the growth forecasts saw a marginal upward revision, SME owners can feel that they have, once again, been an afterthought. If this government truly wants to pursue growth, they aren’t talking to businesses, the part of the economy most responsible for it.
It’s a huge missed opportunity.
My frustration, and the frustration shared by many SME founders, is that this budget lacked a big, brave, growth-focused strategy. There was no talk of AI, almost no mention of regulatory reform, and (of course) the nameless elephant in the room that holds back UK SMEs: our strained relationship with our largest trading partner.
Help! Our growth strategy is missing
While we can always find pockets of positive news in the detail, such as increased funding for the British Business Bank, the extension of full expensing, and key grant resurgence like the Women in Innovation awards and funding directed at the geographies that need it the most, these sticking plasters don’t disguise the fact that the system needs major surgery.
As an economy, we are still waiting for a government, regardless of political colour, to genuinely reward risk-takers and articulate a clear plan for achieving the 3% or 4% economic growth we need.
Why does the government fundamentally misunderstand the psychology of the SME owner? We don’t just need minor tax tweaks; we need a positive economic “vibe”, creating a sense of confidence and opportunity that encourages investment and expansion. At the moment, the conversation is too focused on where to find money to spend, and not focused enough on where the next generation of prosperity will come from.
Rejoining the Customs Union is NOT radical
If this Labour government is serious about achieving growth, a good place to start is fixing the underlying issues that deter investment and make life harder for exporting SMEs. They must grasp the nettle and take the decisive step of rejoining the European Union Customs Union.
If you think this is radical, you’re wrong. It’s no more than a return to relations as they were less than ten years ago, after the delivery of Brexit has been a demonstrable disaster.
For years, UK SMEs have been grappling with the friction caused by leaving the Customs Union. The impact of customs checks, regulatory divergence, and increased paperwork has created a silent, suffocating tax on every small business dealing with European clients or suppliers. This burden increases time and administration costs which raises the cost of goods and services, making UK businesses less competitive. For small firms with limited resources, the complexity acts as a powerful disincentive to export or scale into the massive EU single market. And the lack of seamless trade introduces delays and uncertainty, hurting sectors from manufacturing to retail.
Returning to the Customs Union would immediately remove this friction, acting as a massive, cost-free stimulus package for thousands of UK SMEs. It would cut bureaucracy, boost exports and restore confidence. We would see an end to vast amounts of paperwork and customs checks, immediately freeing up capital for SMEs to innovate and focus on core operations. There would be seamless access to the UK’s largest market, instantly making UK goods and services cheaper and more attractive abroad. And it would send a clear, bold signal to the international business community that the UK is committed to pragmatic, barrier-free trade, reversing the current “ruining the vibe” sentiment.
Labour won a landslide based on being the grownups in the room. Grownups make tough calls. They weren’t given an unassailable majority at the ballot box to keep the status quo. If the Labour government truly wants to fulfil its promise to avoid austerity and promote growth, incremental tax relief is not enough. They need to rip off the sticking plasters and graft on the Customs Union.
It is the most powerful, immediate action they can take to support UK business growth, and we should be demanding it.
