Chancellor Rachel Reeves has been accused of ignoring small businesses and the services sector by offering nothing in her Spring Statement to help them through the imminent increases in costs.

As predicted, her statement focused on defence, housing, getting people off benefits and long growth forecasts, but left small firms fuming that it was a “missed opportunity” to ease the pressures on smaller firms.

The Chancellor confirmed an increase in defence spending as a percentage of GDP which would create jobs in the supply industry, and a commitment to housebuilding that would be the highest for 40 years.

The increase in the defence budget meant areas like Glasgow, Derby and Newport will see advanced manufacturing production with new business opportunities and more demand for skilled jobs, she said.

She set a target to reduce the administrative costs of government departments by 15% by 2030 which will see about 10,000 civil service jobs cut.

The government, she said, “is serious about taking the action needed to grow our economy” and, after committing to her fiscal rules, she said there is “nothing Labour about working people paying the price for economic irresponsibility”.

On the cuts to the welfare budget, she said that “if you can work, you should work,” but added “if you cannot work you should be properly supported”.

However, the growth forecast for this year has been halved and those working in the small business sector who hoped for some extra help on business rates, VAT and even a rowing back on the rise in National Insurance Contributions, were left disappointed.

Harry Mills, Director at Oku Markets commented: “Chancellor Rachel Reeves’ much-awaited Spring Statement was, predictably, a speech of deflection and excuses, and not much else.”

He added: “The Chancellor repeatedly – and erroneously – seemed to take the plaudits for the Bank of England’s three recent interest rate cuts.

“This was a nothing-statement punctuated by nauseating repeats of her new catchphrase, ‘promised by this Labour government, delivered by this Labour government, opposed by the parties opposite’. Absolutely pointless.

Stephen Montgomery, director of the The Scottish Hospitality Group, said: “The hospitality sector is increasingly losing confidence in the Chancellor of the Exchequer – it will only be regained if she finally listens, acts and helps the hospitality industry to grow and thrive.”

Kate Nicholls, chief executive of UKHospitality, said: “Growth won’t just happen without a plan. Today’s statement was yet another missed opportunity to avoid an April cliff edge which will level a devastating £3.4 billion annual increase to the sector’s tax bill.

“The Government’s own analysis shows the failure to address the employer NICs threshold will force businesses to freeze recruitment, reduce hours available for staff and reduce employment levels in the very sectors the Government needs to achieve its goal to get people off welfare.

“If the Government is serious about getting Britain working, it needs hospitality. When we were backed after the financial crash and the pandemic, we proved how we can help drive economic recovery.

Leon Thompson, executive director of UKHospitality Scotland, said: “Today’s Spring Statement underlines the need for a clear growth plan for the hospitality industry, and the Scottish Government can aid this by using the increased £28m in Barnett consequentials to support our hospitality sector.”

Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: “The promise of growth a decade from now will mean nothing to businesses uncertain if they’ll survive a year from now.

“The Government cannot ignore the immediate crisis many enterprises are facing on the basis of forecasts projecting several years into the future. Businesses need support today to secure the economic growth of tomorrow.”

Helen Dickinson, chief executive at the British Retail Consortium, said: “The Chancellor has committed to tearing down regulatory barriers and implementing policies to grow our economy and create jobs.

“And yet retailers are facing tough choices as they try to find ways to address the £7bn in new costs this year as a result of increased employer NICs, higher NLW, and the new packaging tax. The impact of this will be higher prices, fewer shops and less investment in jobs.”

George Holmes, managing director of Aurora Capital, said: “The Spring Statement delivered few surprises, but for small businesses, that’s part of the problem.

“With no new tax or spending support announced, and inflation now down to 2.8%, many SMEs will feel this was a missed opportunity to help them weather the cost pressures they’re still facing.”

“Employment costs are set to rise significantly in April, with higher National Insurance contributions and the increase to the National Living Wage kicking in.

“Yet, despite clear warnings from business groups, there was no new support to ease the pressure on small employers; no targeted reliefs, no funding boosts, and no signal of short-term help with borrowing costs.”

“If the government is serious about making the UK the best place to start and scale a business, it needs to do more than talk about long-term stability. Small businesses are ready to drive growth, but they can’t do it on their own.”

Craig Letton, CEO of Hyble, the Edinburgh-based printing company, said: The Spring Budget could have focused on incentivising founders and entrepreneurs, who are vital to driving innovation and job creation. 

“The current ecosystem in the UK can feel overly punitive, with rising tax burdens, bureaucratic hurdles, and red tape that slow down progress and hinder our ability to innovate and grow. I know several founders who are looking to leave the UK for more business-friendly environments like the USA or UAE.

“One key measure I’d have liked to see is the reinstatement of Entrepreneurs’ Relief at £10 million.”

Hamish Martin, Partner at LAVA Advisory Partners, said: “The Chancellor was true to her word that today’s announcement would be more of an economic update than delivering a raft of tax reforms or spending commitments.

“For businesses, hopes of u-turns on previously-announced policies such as National Insurance hikes did not materialise, meaning no relief for the escalating costs that are creating headaches for many of the UK’s 5.5 million SMEs.

“The extremely modest forecasts for the UK economy could make life challenging for small companies, in turn opening the door to more consolidation across various industries.”

Shadow Chancellor Mel Stride said the Chancellor was right to say the world is changing because the Conservative government had left office with the UK among the best performing G7 economies and now growth has been halved.

He said Ms Reeves has “tanked the economy” and claimed the government fabricated the £22bn blackhole ministers say they found in the public finances when they took office.

The Treasury’s Spring Statement documents published after her speech confirmed the Chancellor is reviewing Individual Savings Accounts.

It states: “The government is looking at options for reforms to Individual Savings Accounts that get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission.”

Steve Cameron, pensions director at Aegon, noted  that the statement included a single mention of pensions relating to future changes to scheme investments.

“This is likely to lead to workplace pensions placing more of their members’ funds in investments designed to boost UK economic growth, while also hoping to deliver better returns for pension savers,” he said. “We look forward to more detail in the Pensions Investment Review, due to report back next month.” 

Comment: Sorry, Rachel, you just don’t get it

Economic forecasts

• The Office for Budget Responsibility (OBR) has downgraded predicted growth for this year from 2% to 1% but has upgraded estimated growth for the next four years, to 1.9% next year, 1.8% in 2027, then 1.7% in 2028 and 1.8% in 2029

• Inflation is forecast to average 3.2% this year, up from 2.6% previously forecast, before falling back to 2.1% in 2026
  
• Inflation is expected to hit the 2% Bank of England target from 2027
  
• The OBR says the government’s changes to the planning system in England will boost the size of the economy by 0.2% by 2030
  
• There are £28 million of consequentials for the Scottish government