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Spring Statement 2026: SMEs face rising costs and hiring uncertainty

Derek Ryan said: “Today’s absence of targeted SME measures may mean that uncertainty lingers, doing very little for business confidence."

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While Chancellor Rachel Reeves used the Spring Statement to reinforce fiscal discipline and market credibility, experts in the small and medium-sized enterprise (SME) market said the update offered little immediate relief for businesses grappling with rising costs.

With the Office for Budget Responsibility (OBR) trimming 2026 growth to 1.1% and financial markets unsettled by energy price shocks linked to escalating conflict in the Middle East, SMEs are undoubtedly facing a complex outlook for the next six to 12 months.

Aman Parmar, head of marketing at BizSpace, said Rachel Reeves’ Spring Statement was low-key on new policy but will impact small and medium-sized enterprises (SMEs) through updated forecasts for costs, hiring, confidence and investment decisions over the next six to 12 months.

Parmar said there was little acknowledgement of the fragility small businesses are facing, given the renewed energy-price shock rippling through markets.

Parmar said: “What SMEs needed from today was a clear path to lowering the cost of doing business. Instead, they’ve effectively been told to wait for Autumn. 

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“Key pressures SMEs face today are not abstract: business rates remain a day-to-day drag on high streets, light industrial operators and local services, and the wider business community has been consistently asking for faster relief on energy costs and meaningful tax simplification. 

“In this environment, the practical impact is that SMEs will be forced to keep prioritising flexibility over long-term commitments.”

Parmar added: “The renewed uncertainty surrounding conflict in the Middle East creates an added layer of volatility that British SMEs can ill afford. 

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“The most immediate risk is to energy markets, as sustained disruption to oil or gas supply routes typically pushes up wholesale prices. 

“This quickly filters through to higher fuel, logistics and utilities costs for small businesses already operating on tight margins.”

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He said: “There is also the wider confidence effect. Heightened geopolitical tension tends to unsettle financial markets, which can lead to currency fluctuations and upward pressure on borrowing costs. 

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“For SMEs reliant on lending to manage cashflow or fund growth, even small shifts in interest rate expectations can materially affect decision-making.”

Parmar noted small businesses are looking for certainty and domestic policies that ease financial strain, which he said was absent from the Spring Statement. 

He added that while the Chancellor focused on credibility with markets, SMEs remain the engine room of local growth, jobs and innovation. 

Derek Ryan, CEO of North West Europe at Bibby Financial Services, said: “The Chancellor’s Spring Statement is unlikely to shift the dial for SMEs that were hoping for fresh measures to unlock growth. 

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“With 46 percent of firms delaying major investment decisions until after today’s announcement, this was an important moment to unlock pent-up investment – even if the Government’s focus for today is on stability, rather than new fiscal intervention.

“Many small business leaders will still be grappling with the high costs of doing business and the elevated tax burden, both of which continue to weigh on hiring and investment decisions.”

Ryan added: “Today’s absence of targeted SME measures may mean that uncertainty lingers, doing very little for business confidence.

“SMEs won’t have expected a silver bullet from today, but they do need a clear and consistent strategy that supports investment, improves access to finance and eases the pressures that constrain growth. 

“Stability is welcome – but without visible momentum behind small business growth, SME confidence risks remaining stuck in neutral at a time when the UK economy needs it in gear.”

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Ollie Whiting, CEO of La Fosse, said: “Because the Spring Statement maintained a tight fiscal stance, in line with Reeves’ emphasis on maintaining stability in public finances amid global uncertainty, employers are likely to continue prioritising capability growth over headcount growth. 

“The underlying economic picture is more nuanced than headlines suggest. 

“January’s record budget surplus, and stronger than expected tax receipts, show there is resilience in the system.”

Whiting added: “But because that fiscal headroom is not necessarily being used for stimulus or skills investment, employers are unlikely to interpret this resilience as a signal to accelerate hiring. 

“Instead, the government’s tight stance reinforces a cautious environment. 

“That typically translates into slower discretionary hiring, longer approval cycles and greater scrutiny on return on investment for new roles.”

He said: “That being said, at La Fosse we find that hiring confidence is increasingly shaped by productivity strategy. 

“Boards are asking what capability they need to compete in an AI enabled economy, a point that aligns with Reeves’ commitment today to backing economic stability and future growth, not simply how many people they should add to a workforce. 

 “As a result of the Statement, we are therefore likely to see fewer broad based hiring waves and more targeted recruitment in areas such as AI, data, cyber security and automation.”

He added: “Generally, organisations will also continue to prioritise internal upskilling in some of these areas over volume external hiring, to see greater productivity and output from the existing workforce.”

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