THE HERALD | Wednesday 26th November 2025
The forthcoming Budget might have been seen as a chance for the UK Government to reset its relationship with business, gaining some much-needed credibility in the process. Having weathered fierce political and financial headwinds in the 16 months or so since taking office, the Chancellor and her colleagues still have no shortage of fiscal and wider economic challenges.
But in the wake of the heavily trailed and now seemingly reversed plan to break a key manifesto commitment by raising income tax, not to mention the political intrigue sparked by Number 10 briefing around the Prime Minister’s future, Budget Day now looms with a sense of foreboding for most, both inside and outside government.
The news that UK-wide unemployment has risen, albeit the picture in Scotland is more positive, simply underlines the challenges for Rachel Reeves, as does the fact that for far too many people, the cost-of-living crisis is as real as ever.
That should not be surprising given that, on most available measures, the average standard of living for many people has still to recover to the levels they enjoyed before the 2008 financial crash. That stark fact – that for a huge part of the UK population, there has been no uptick whatsoever in their real-term finances for the best part of two decades – should give everyone serious pause for thought about the policies pursued by successive governments.
However, those twin goals – of how to deliver a package of measures which businesses approve of and which are capable of kick-starting sustained economic growth, whilst also coming up with policies that ease the burdens of everyday living costs for ordinary people and start to give them hope of a brighter future – are the combined task facing the Chancellor.
Together, they encapsulate the fundamental economic challenge of the current moment. It is a challenge which may defy easy solutions but which, if addressed with enough imagination and flair, is capable of being successfully addressed.
That is why I was pleased to see recent pronouncements from UK ministers on the need for bottom-up economic growth of the kind which not only provides opportunities for business development but also delivers valuable employment opportunities for individuals; opportunities which are capable of lifting whole communities out of the economic and social malaise which continues to afflict too many parts of the country.
I was particularly heartened to hear UK Energy Secretary Ed Miliband say that plans for a new generation of clean energy jobs were about creating an environment in which no one would be forced to leave their hometown to find a decent job.
That is the kind of approach which communities across Scotland and other parts of the UK which have suffered most from the impact of deindustrialization have been crying out for.
As a businessperson and investor who wants to see the best for the Scottish and UK economies, and who cares passionately about the need to regenerate growth and opportunity in our communities, I welcome such an approach.
But we need to see more action to help boost growth. And the focus on clean energy jobs should not mean deprioritizing our oil and gas sector.
The Federation of Small Businesses in Scotland recently reported that small business confidence has fallen significantly.
The FSB is calling on the Chancellor to take steps in the Budget to support entrepreneurship whilst easing tax and employment costs on smaller firms. Principal among those is the hike on employers’ National Insurance contributions, a move which has been met with near universal opposition since its introduction, and which it is difficult to separate from the aforementioned rise in UK-wide joblessness. But the Chancellor should also resist the temptation to replace the measure with stealth taxes which would prove equally restrictive on business.
I echo the calls from the FSB. Smaller businesses make up 98 per cent of all enterprises in Scotland, employing 900,000 people and turning over £93 billion annually – but more than a quarter of those firms expect to shrink over the next year.
Of course, the UK Budget also has knock-on consequences for the Scottish Government as they prepare their own spending plans. They should also resist the temptation to place more constraints on business growth, instead reinvesting underspent money to help drive entrepreneurship.
There can be no long-term recovery for the UK economy to put the country on a path to economic growth without support for business which creates a climate in which entrepreneurialism, investment and risk-taking are rewarded.
But equally, there can be no path to sustainable growth without ensuring that its benefits are widely felt and not confined to boardrooms and shareholders, so that working people begin to see their real terms income and their standard of living starting to rise once again.
In the short term, the Chancellor must look again at measures which are hampering growth and which are, in some cases, actually costing jobs.
Balancing the books is never easy for any government, but this Budget is still an opportunity to chart a course which can deliver for people, business and communities for the long term.
Dr Marie Macklin CBE is a leading Scottish businesswoman and investor.
