As the Chancellor prepares to deliver the Autumn Budget on 28 October, UK businesses wait to hear what is in the red box for them and whether it will address the growing disconnect between policymakers’ priorities and the barriers businesses say are holding them back.
CIMA’s Building the Foundations of a Better Business Environment report, which draws on the views of 512 SME leaders, 100 MPs and more than 2,000 members of the public, reveals a clear message: SMEs want to grow, but many feel the current operating environment is preventing them.
Pause for thought
While growth remains a government policy, almost half of SMEs (45%) are focused on maintaining stability rather than pursuing growth. A further quarter (25%) are simply focused on survival. Just 2% describe their ambitions as “ambitious growth”.
Government messages on boosting investment, productivity and regional prosperity appear to be getting lost in translation, as 84% of SME leaders say government growth announcements rarely translate into tangible support, while 70% say there is a “lack of clarity” in the government’s plan.
The findings also uncover a significant gap between the challenges policymakers focus on and those businesses experience every day. MPs prioritise issues such as energy costs, innovation and skills shortages. SMEs, however, identify a different set of barriers: taxation, weak consumer demand, regulatory complexity and policy uncertainty.
Tax is the leading concern, with employment taxes, National Insurance costs and the broader tax framework seen as major constraints on hiring, investment and growth. Only 15% believe the government is creating a competitive tax environment that supports growth.
The volume and complexity of regulation remain a major challenge, with 75% of leaders citing this and 65% agreeing that the regulatory burden is disproportionate. Frequent changes to government policy compound the problem.
While MPs may misread some SMEs’ priorities, 75% of MPs said they recognised the regulatory burden for SMEs is disproportionate compared to larger businesses.
The growth opportunity sitting in plain sight
Public support for economic growth remains optimistic, with nearly two-thirds of the public supporting greater local control over economic decision-making, with local employers viewed as the institutions most trusted to drive growth in communities.
The key growth opportunity may lie with the large proportion of SMEs focused on stability. These firms are not opposed to growth, they simply do not believe the current environment makes growth sufficiently attractive or achievable.
Policymakers should focus on creating conditions that enable businesses to shift from maintaining operations to investing, hiring and expanding.
What should the Chancellor prioritise for a Budget focused on growth?
Fix the tax environment
SMEs want certainty and predictability. A multi-year business tax roadmap would give firms confidence to invest for the long term, while reducing employment-related tax burdens would encourage hiring and expansion.
The Budget provides an opportunity for the Chancellor to demonstrate that the tax system will reward growth rather than penalise it.
Boost business and consumer confidence
Weak consumer demand is now one of the most significant barriers facing SMEs, with nearly two-thirds identifying it as a challenge.
Growth strategies often focus on supply-side reforms, but businesses are making clear that demand matters too. Without confident consumers, businesses are less likely to invest, recruit or expand.
Deliver practical support for SMEs
Many SMEs feel government growth announcements fail to translate into tangible support. The report highlights strong backing for practical measures such as better access to finance, targeted business support and the return of programmes such as a Growth Accelerator Scheme.
Establishing employer-led Productivity Hubs in every Strategic Authority area would bring businesses, educators and local government together to better coordinate workforce planning and skills investment. Combined with a stronger role for Strategic Authorities in post-16 skills planning and funding, this would help ensure training reflects local economic needs and supports regional growth.
Close the gap between government and business
The most important conclusion from CIMA’s research is the need for deeper engagement between policymakers and the businesses they seek to support. SMEs consistently report feeling disconnected from policy decisions that affect them.
A more responsive policymaking process, grounded in business realities, would ensure future interventions address real-world challenges rather than perceived ones. Government could make a demonstrable commitment to SMEs by putting the Small Business Regulatory Taskforce on a statutory footing, renamed and with an expanded role as the SME Commission.
A moment the Chancellor cannot afford to miss
The Autumn Budget arrives at a moment of genuine opportunity for the government to show that it really is “on the side of business” and make the economic agenda policy mean more than words. The ingredients are there: the public supports locally driven growth and businesses want to invest, hire and expand. What is missing is alignment between policy priorities and business realities.
If the Chancellor uses the Budget to create a more competitive tax system, strengthen business confidence, support skills and productivity, and improve the business environment, the UK can unlock significant growth potential already sitting within its SME community.
Growth is possible, but government must first remove the barriers preventing businesses from pursuing it.
Key takeaways
- Almost half of UK SMEs (45%) are focused on maintaining stability rather than pursuing growth, suggesting government growth messages are not landing. The key opportunity lies in helping stability-focused businesses move to an active growth footing.
- Tax is the leading concern for SMEs, with employment taxes, National Insurance and the broader tax framework seen as obstacles. A multi-year business tax roadmap would give firms the certainty needed to invest and hire.
- Weak consumer demand is now one of the most significant barriers facing SMEs, with nearly two-thirds identifying it as a challenge. Growth strategies that focus only on supply-side reforms miss what businesses are actually telling policymakers.
- 75% of SME leaders cite the volume and complexity of regulation as a major challenge, yet there is a significant gap between what MPs think businesses need and what businesses actually report as their priorities.
- CIMA’s research calls for employer-led Productivity Hubs in every Strategic Authority area, a more competitive tax system, and a more responsive policymaking process grounded in business realities rather than political assumptions.
