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Rachel Reeves’s Spring Statement has introduced a range of measures poised to shape the business environment for SMEs in the coming years.
With the Office for Budget Responsibility (OBR) halving its growth forecast from 2% to 1% (still more optimistic than the Bank of England’s 0.7%), and a reaffirmed commitment to reaching a 2% inflation target by 2027, the outlook for small and medium-sized enterprises is a mixed bag of opportunities and challenges. Here’s our take on the key announcements and what they may mean for businesses across the sectors Millbrook Business Finance serves.
Slower Growth, But a Path to Inflation Reduction
The halving of the growth forecast clearly signals caution. Whilst the OBR’s forecast remains more positive than that of the Bank of England, the slowdown can create more hesitant markets, which in turn may lead to tighter consumer and business spending. Nonetheless, Reeves’s insistence that inflation could be brought under control and down to 2% by 2027 suggests a more stable economic environment in the medium to long term.
For SMEs, that stability can translate into better visibility when planning for future expansions, managing cash flow, and securing favourable lending rates—though, in the short term, business owners may still need to remain vigilant against cost pressures.
Construction Sector Boost
Perhaps the most direct and significant announcement for the construction sector is the government’s pledge of £600 million to train up to 60,000 additional construction workers. With ten new technical excellence colleges set to open nationwide, this investment could help alleviate current skills shortages and drive higher standards across the industry.
Simultaneously, a push towards increased housebuilding—up to a forty-year high, according to the OBR—brings the promise of more construction projects. The new planning reforms, estimated to deliver over 1.3 million homes in five years, position the sector for strong demand. Beyond housing, larger infrastructure goals will likely place further emphasis on commercial and public projects.
Opportunity:
Construction SMEs that can scale up to meet demand, especially those leveraging finance solutions to invest in new vehicles, machinery, equipment or expand their workforce, could find themselves in a strong competitive position. If your business is considering expansion or purchasing new vehicles or machinery, our asset and equipment finance solutions offer helpful ways to purchase assets without impacting cashflow.
Challenge:
Rapid expansion inevitably strains cash flow. Planning for future growth—staffing, operational costs, and equipment acquisition—can prove daunting without the right financial strategies. By speaking with a business finance specialist about these challenges, they can help you with finance support strategies to navigate these challenges.
Household Disposable Income on the Rise
Reeves announced that households stand to be, on average, £500 better off each year. In theory, this should funnel additional consumer spending into the economy, benefiting sectors like retail, hospitality, and leisure—areas where SMEs often thrive.
Opportunity:
Increased consumer confidence and spending can boost SMEs’ revenues and profit margins.
Challenge:
The distribution of this disposable income won’t be uniform across regions or demographics, meaning that some businesses may benefit more than others. Moreover, SMEs already juggling higher costs for energy, raw materials, or staffing may find that improved consumer demand only partially offsets inflationary pressures.
Working With the Bank of England
Reeves also emphasised close collaboration with the Bank of England. This focus on monetary policy indicates that decisions on interest rates and money supply will remain under tight scrutiny, with the 2% inflation target by 2027 at the heart of that strategy. For SMEs, interest rate movements can significantly impact the cost of borrowing, making it crucial to keep a watchful eye on policy changes.
Sector-by-Sector Implications
At Millbrook Business Finance, we cater to a variety of industries. Many of our sectors—including construction, healthcare, manufacturing, IT, transport and logistics, agriculture, and more—could see different degrees of impact:
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Construction: Likely to experience an uptick in projects and jobs thanks to increased housebuilding and investment in new skills.
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Manufacturing & Transport: Potentially affected by economic headwinds if consumer and corporate spending slows, but investments in new infrastructure or housing developments may drive demand for products and services.
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Healthcare & Agriculture: Demographic changes and government spending priorities may continue to influence these sectors differently, but a more stable economy generally fosters better investment conditions.
- Retail, Hospitality and Leisure: These sectors were hopeful the chancellor would indicate a rise in relief rate for businesses within this space, after cutting it to 40% in the October budget, however, Reeves resisted calls for business relief in the Spring Statement.
How Millbrook Business Finance Can Help
In times of economic uncertainty or sector expansion, access to flexible and tailored financing is critical for SMEs. Whether you’re seeking to invest in new equipment, manage cash flow to weather short-term fluctuations, or capitalise on market opportunities, Millbrook Business Finance stands ready to support your growth.
We understand the nuances of each sector and can provide:
Business Loans
Business loans are a straightforward way to secure fast, flexible funding for short-term operational costs or expansion plans.
- Quick approval times and competitive rates
- Helps manage cash flow gaps and refinance existing debt
- Straightforward repayment schedules
- Flexibility, making them deal for short- to medium-term funding needs
Asset & Equipment Finance
Acquire or upgrade the machinery, vehicles, and technology you need without tying up working capital with asset and equipment finance.
- Spread the cost over manageable instalments
- Preserve cash flow for other business priorities
- Access up-to-date equipment without large upfront costs
- Tailored repayment options to match your revenue cycles
Merchant Cash Advance
Merchant cash advances allow repayment through a percentage of your card takings, making it a flexible option for businesses with fluctuating revenues.
- Aligns payments with your actual earnings
- Quick approval with minimal paperwork
- Suited to retail sectors with card-based transactions
- Avoids large repayments preserving cashflow
Our business finance specialists have expertise ensures that you can navigate the evolving economic landscape—whether it’s adapting to slower growth, scaling operations to meet new demand, or positioning your business for the eventual return of moderate inflation.
Ready to Steer Through 2025 and Beyond?
Rachel Reeves’s Spring Statement indicates that while growth may slow, targeted support, particularly in construction and infrastructure, could pave the way to long-term economic stability. We encourage SME owners to stay informed, remain adaptable, and secure the right finance solutions to position themselves for success.
If you’d like to discuss how Millbrook Business Finance can support your business through these changes, get in touch with our team today by checking your eligibility.
