Autumn Budget analysis 2026: what it means for business

The OBR’s October 2026 Economic and fiscal outlook paints a challenging picture for the UK economy and public finances, following renewed rises in global energy prices and interest rates since March. Higher debt interest and inflation have increased pre-measures borrowing by an average of £11bn a year compared with the March forecast, while Budget measures provide some near-term fiscal support before reducing borrowing later in the forecast. Despite this deterioration, the Government meets its fiscal mandate for the current budget to be in surplus in 2029-30 with £15bn of headroom, £7bn less than when the rules were last formally assessed at Budget 2025. Public sector net debt is forecast to peak at around 97% of GDP in 2028-29 before falling slightly to 96% by 2031-32.

The near-term growth outlook has weakened as higher energy prices and interest rates weigh on households and businesses. The OBR expects real GDP growth of 1.2% in 2026, slightly stronger than anticipated in March, before growth slows to 1.0% in 2027, a 0.5 percentage point downgrade. As energy prices fall back, growth is expected to recover to 1.6% in 2028, 1.8% in 2029 and 1.7% in 2030. The medium-term supply outlook is broadly unchanged from March, while stronger business investment slightly raises productivity through greater capital deepening. However, the OBR judges that the Employment Rights Act is likely to have a negative economic impact through higher costs, reduced flexibility and uncertainty for businesses, although it considers the effect too uncertain to make an explicit adjustment to potential output.

Higher energy prices also mean inflation is now expected to remain above the Bank of England’s 2% target for longer. CPI inflation is forecast to average 3.1% in 2026 and 3.4% in 2027, reaching a quarterly peak of 3.8% in early 2027, before returning to target during 2028. This squeeze is expected to leave real earnings flat in both 2027 and 2028 and real household disposable income per person falling slightly in the near term. For businesses, the outlook remains difficult: higher energy and borrowing costs are weighing on activity, while firms are expected increasingly to pass higher costs through to prices as they rebuild margins. The OBR nevertheless expects recent resilience in business investment to persist over the medium term, with its level around 0.5% higher in 2030 than forecast in March.

Financial markets have taken today’s Budget announcements in their stride. Gilts have reacted broadly positively even as the Chancellor confirmed his fiscal headroom had fallen to £15bn (from the £22bn set at Budget 2025), and absorbing some upward pressure coming from the Debt Management Office (DMO) announcing that its issuance of gilts for 2026-27 will be slightly higher than previously expected. Yields (which move inversely to prices) fell across short- and long-dated gilts. By 2:00pm, 2-year gilts stood at 4.92% (-0.03pp since today’s open), 10-year gilts at 5.31% (-0.05pp) and the 30-year gilt at 5.70% (-0.09pp), respectively.

The pound slipped to a one-week low against the dollar this morning, before stabilising as the Chancellor delivered his statement. The pound stood at $1.33 against the US dollar (depreciating by 0.1% since today’s open) and €1.19 against the euro (depreciating by 0.1%)

UK equity markets have rallied today, continuing to appreciate during the Chancellor’s speech, before giving back some gains possibly in response to the OBR’s weaker near-term growth and higher inflation outlook. The FTSE 350 Bank Index rose strongly (1.2% by 2:00pm) in response to news this morning that the increase in Bank surcharge would be both temporary and below expectations, and the scrapping of the reduction in the cash ISA allowance. The FTSE 100 – which is dominated by internationally oriented firms – rose 0.2%. The more domestically-oriented FTSE 250 recorded a modest gain of 0.3%. 

The Autumn Budget invests £194m in stronger national cyber defences, including new tools to identify vulnerabilities across critical infrastructure and the wider economy and develop AI-enabled defences with industry. This should strengthen businesses’ protection against cyber threats while creating opportunities for industry to develop, test and deploy new cyber technologies in partnership with government. 

This aligns with the CBI’s work across government, including around the National Cyber Action Plan, to strengthen cyber resilience across the economy and calling for close collaboration between government and business to jointly respond to evolving cyber threats.

While there was restraint on youth National Minimum Wage rates, the National Living Wage (NLW) rise adds further pressure to employment costs

The government has confirmed a 3.9% increase for both the National Living Wage (NLW) and the youth National Minimum Wage rates from April 2027. The headline increase in the NLW will add to the cumulative cost of employing people at a time when job creation is already weak. CBI survey data shows that just 15% of firms are confident about hiring, down from 24% last year.

The decision not to progress with the convergence of the youth rates and the headline NLW this year is, however, a welcome recognition of the impact rising business costs have on hiring and young people's access to labour market opportunities. The CBI has consistently called for youth rates to be retained while youth employment prospects remain weak.

The Budget package increases tax-free mileage above 10,000 miles from 25p to 35p from April 2027, commits to modernising UK and overseas subsistence rates from April 2028, and proposes statutory tax exemptions for employer-paid Certificate of Sponsorship fees and Immigration Skills Charges from 28 October 2026.

These changes help businesses reimburse staff more fairly, reduce expense-processing burdens and remove uncertainty over the treatment of specified compulsory sponsorship costs. They follow CBI Budget and Spending Review representations, and subsequent Employment Taxes Working Group discussions with HM Treasury and HMRC. 

The government is establishing a Better Regulation Executive to strengthen the direction and implementation of regulatory reform across Whitehall. A stronger focus on proportionate regulation should help reduce unnecessary costs and complexity for firms, supporting the CBI's wider push for a regulatory environment that enables investment and growth.

The government has launched a wide-ranging Corporation Tax simplification programme, alongside a separate call for evidence on modernising administration. This creates an opportunity to reduce duplicated compliance requirements and simplify companies’ tax calculations, freeing resources for investment and growth. The programme reflects CBI calls to reduce overlap between the OECD’s Pillar Two regime and similar UK anti-avoidance rules, streamline reporting and simplify withholding tax, supported by member insights and engagement with HM Treasury and HMRC throughout 2026.

The adoption of the MAC’s (Migration Advisory Committee) recommendation will bring the occupation-specific minimum salary threshold back to the 25th percentile of wages. From spring 2027, businesses will be required to pay the higher of the general salary threshold or the 25th percentile of earnings for the given occupation (the ‘going rate’), down from the median/50th percentile. This builds on CBI lobbying that the 25th percentile is a more proportionate way of protecting against the risk of undercutting domestic workers’ pay and protecting businesses’ ability to access the system.

HMRC has published its response to the consultation on mandatory direct debit for VAT and PAYE payments, following strong opposition to the proposals from members of the CBI’s Indirect Taxes Working Group and Employment Taxes Working Group. From April 2029, businesses will retain their preferred VAT and PAYE payment methods, with direct debit used as a safeguard for unpaid liabilities unless exempt, while HMRC commits to improving its systems before implementation. This follows the CBI persistently raising longstanding payment allocation and reconciliation problems that leave businesses spending significant time resolving incorrect balances. 

The government will move ahead with restrictions on non-compete clauses, limiting firms’ ability to protect investment.

The Chancellor confirmed the government will legislate to restrict the use of non-compete clauses and will launch a review of the 'wider use of restrictive practices', with further detail to be set out in early 2027.

For business, these measures risk disincentivising investment by reducing the options available to protect commercially sensitive information when employees move to competitors. Whilst greater clarity on their use could be helpful, existing restrictions already make unreasonable use of non-competes illegal. Wider measures that restrict the legitimate use of alternatives to non-competes, such as gardening leave or non-solicitation clauses, could leave firms with even fewer options to protect their commercial interests.

The Overnight Visitor Levy risks higher costs for holidaymakers and hospitality. It is disappointing that the Overnight Visitor Levy is moving ahead, adding complexity and administrative burden for hospitality groups and potential costs for 'staycationers' for relatively little revenue, while the lack of a cap on rates risks the high and rising rates already seen in France and Spain.

If implemented, local authorities must commit to a coordinated, long-term approach to rates, set at the lowest possible level to keep holidays affordable, though there are better ways to fund and design fiscal devolution and the CBI stands ready to support government to focus on those.

Moves to bring down energy bills focused on the cost of living as opposed to the cost of doing business.

The Chancellor rightly led with the need to give households breathing space on energy costs. The measures remain targeted at households and include previously announced policies, such as extending the VAT reduction and cancelling plans to add 5p back onto fuel duty, as well as a new £100 Household Energy Payment.

Abolishing gas standing charges on domestic energy bills and removing the Gas Shipper Obligation on gas bills in Great Britain again demonstrates the need for wider reform of energy bills. It also raises the question of how levies are placed on bills and underlines the urgent need for a similar examination of the policy costs borne through business energy bills.

It is therefore positive that the government will introduce a comprehensive Cost Control Framework at the 2027 Spending Review. However, that timetable does not address the urgency of high energy costs businesses face today which is impacting the cost of doing business. 

The increase in the Bank Corporation Tax Surcharge adds further pressure to a UK financial services sector that already faces a higher tax burden than other global centres, risking undermining the UK’s international competitiveness.

While the outcome was less severe than feared (with a rate increase of 3% compared to the expected 5%), increasing the burden on one of the UK’s strongest sectors risks making the UK less attractive for investment and ultimately increasing the cost of finance for businesses and households.

At a time when the government wants to unlock investment and growth, policy should enable financial services to play its full role in financing that ambition rather than constrain its ability to compete and grow.

The expansion of Small Business Rate Relief to retail, hospitality and leisure (RHL) businesses will provide some breathing space for these businesses in England facing significant cost pressures. However, businesses from all sectors that do not benefit from this support face many of the same challenges.

Property size is also no reliable measure of a business’s ability to absorb costs; larger premises support significant investment and employment too. Further sector-specific relief risks adding complexity to an already complicated system, when businesses of all sizes and across all sectors need fundamental reform that supports investment and growth.

This measure reduces the tax relief available for capital investments already made, which did not benefit fully from Full Expensing, AIA or other First Year Allowances. While it came alongside an increase in the First Year Allowance, this only benefits new investment, and businesses will lose out overall with the measure expected to raise over £1bn a year by 2028-29. As the second cut to WDAs in two years, it undermines businesses’ confidence in the value of UK investment. 

Despite already having legislation setting out the Oil and Gas Revenue Levy (OGRL) as the long-term successor to the Energy Profits Levy, government confirmed the EPL will remain until April 2030 unless the price floor is triggered sooner, more than three years after the January 2027 start the CBI has called for. Investment in the North Sea is planned years ahead, so every extra year of the EPL weighs on the decisions that sustain supply chain jobs across the North East of Scotland.  

The government confirmed that mandatory certification for mechanically recycled plastic packaging will start from April 2030. The CBI supports efforts to tackle fraudulent recycled-content claims, but mandatory certification risks being a disproportionate response when the scale of the problem remains unclear. Adding further costs and complexity for compliant businesses runs counter to the need for a simpler, proportionate tax system.

The cost of employment is already beyond breaking point for many businesses. The CBI will continue to press the government to bring costs down and avoid further measures that make it more expensive or risky to hire, particularly while the labour market is already weak.

We will engage policymakers on the remaining Employment Rights Act measures, including the right to guaranteed hours, and seek a landing zone that minimises additional cost and complexity for employers.

Alongside this, our work on skills and youth unemployment will focus on removing barriers to hiring and creating more opportunities for young people. We will continue working with the Pensions Commission as it considers the future of automatic enrolment, making the case that any changes should take account of economic conditions and productivity growth. We will also continue to highlight the importance of adopting a pragmatic approach to visa policy that acknowledges the business drivers behind sponsorship. 

Member evidence will be central to our success. We would welcome any further examples of where employment costs are affecting hiring, investment or workforce decisions, as well as practical evidence on the remaining Make Work Pay reforms, skills challenges and youth employment. Get in touch with Laurence Raeburn-Smith, Policy Manager, to get involved and share your views.

The CBI's economic policy and tax policy teams will be continuing to campaign for fair, proportionate tax and regulatory systems that enable businesses to invest and grow. Discover more about our work and get involved.

• Bank Surcharge increase - The CBI will hold Government to its commitment to reduce the surcharge again after 15 months and continue to make the case for a competitive long-term tax and capital environment for UK financial services. We will work with members to demonstrate the sector’s wider contribution to jobs, investment and growth across the UK, and build the evidence on how the cumulative tax burden affects lending, investment decisions and international competitiveness, using this to engage Government on the conditions needed for one of the UK’s strongest sectors to keep growing and supporting the wider economy.
• Business Rates reform - We will make the case for government to move from exploration to delivery, with a clear timetable for genuine business rates reform to a fairer, less complex system. The long-awaited publication of the government’s summary of responses to the Business Rates and Investment call for evidence is a start, and signals exploring and strengthening investment incentives and improving the valuation process to improve transparency and predictability. We will take this forward with HM Treasury and the Valuation Office at our Business Rates Working Group on 4 November. To get involved contact Rahim Mohamed.
• Tax Simplification - The CBI will press HM Treasury and HMRC for practical reforms to remove duplicated rules and reporting for Corporation Tax, including by submitting evidence to the administration review. Members can help prioritise reforms by sharing compliance costs, examples of unnecessary duplication and participate in engagement sessions with officials with Andy Scott.
• Corporation tax returns reform - The CBI will continue working with HMRC to ensure members can feed into further iterations of the reforms, helping test proposals against real-world business processes and identify opportunities to reduce unnecessary complexity and compliance burdens before requirements are finalised. Contact Rahim Mohamed to find out more and join our Digital Tax Working Group.
• Capital allowances - Government needs to look beyond full expensing when making commitments to certainty for investors. That is why the CBI will continue to press for a stable, simple capital allowances regime.
• Employee benefit changes - The CBI will use its Employment Taxes Working Group and HMRC engagement to shape overseas subsistence bands and continue pressing for simpler mileage rules. For opportunities to engage reach out to Andy Scott.
• VAT and PAYE updates - The CBI will press for narrower targeting for mandated VAT and PAYE direct debit payments, certainty on exemptions, effective dispute safeguards and demonstrable improvements to HMRC’s payment systems before implementation. Members can share anonymised examples of misallocated payments, incorrect debts and refund delays to inform further consultation and the design of safeguards through the Indirect Taxes Working Group and Employment Taxes Working Group.
• Oil and gas taxation - the CBI will continue to work with affected sectors and trade bodies to make the case for implementing the OGRL as soon as possible, to give the energy sector the certainty it needs to invest.
• Plastic Packaging Tax - Ahead of implementation in April 2030, the CBI will provide a feedback loop between business and government to minimise the administrative burden, including on certification costs, international supply chains and interaction with existing requirements. Government should use this period to ensure the regime is genuinely proportionate and avoids unnecessary duplication. To get involved and stay informed contact Rahim Mohamed to join our Green Taxes Working Group.

We continue to help businesses strengthen their cyber resilience and bring cross-economy business evidence into government. Building on today’s welcome investment in the UK’s cyber capabilities, we will work with the government to ensure its growing range of cyber initiatives and requirements are joined up and workable for businesses, with a particular focus on streamlining cyber incident reporting and avoiding duplication. 

We will also continue to gather evidence from members and engage the government as new reporting requirements are developed, alongside practical B2B work to help businesses share approaches to cyber resilience. Get in touch with Anna Maes-Prior to get involved through our Cyber & Tech Adoption Working Group.

The CBI will continue to highlight the impact of high energy costs on the competitiveness and cost of doing business in the UK, building on the evidence and recommendations developed through the joint CBI and Energy UK Cutting Business Energy Costs programme.

This work will provide a strong evidence base for engagement with government on the development of the Cost Control Framework ahead of the 2027 Spending Review, as well as informing wider discussions on improving the efficiency and affordability of the electricity market as part of the Government's 10-Year Plan

The government committed £30m to kick-start local AI partnerships with Mayoral Strategic Authorities, bringing together businesses, councils, universities, colleges and other partners to support AI adoption, local services, SMEs and workforce skills. These partnerships should bring practical support, skills and expertise closer to where SMEs operate, helping more firms across the local economy adopt AI. This delivers against asks in our Budget submission for practical, locally delivered support to help SMEs adopt technology, and the call in our report The Adoption Decade to diffuse AI adoption through combined authorities, universities, colleges and business organisations.

A new Data Centre Covenant sets expectations for strategic data centres, including covering the energy costs they create, agreeing local benefit plans and strengthening cyber resilience, in return for government support to speed up grid connections. This will help tackle infrastructure barriers to AI adoption while supporting the secure and resilience compute capacity businesses increasingly rely on. It responds to the CBI’s The AI Adoption Decade’s call to accelerate AI infrastructure deployment through coordinated action on planning, grid connections, connectivity, and cyber resilience, while ensuring infrastructure investment delivers wider local benefits.

The government confirmed new Good Growth funding, beginning with £285m of transitional funding next year, alongside £150m to strengthen Strategic Authority capacity and plans for a new £1.5bn mayoral borrowing facility from 2028. This gives local leaders more of the tools they need to turn growth ambitions into investable projects, responding to the CBI's Budget call for stronger mayoral investment pipelines that can crowd private capital into infrastructure and regeneration.

The Fiscal Devolution Roadmap gives local leaders greater access to long-term, locally retained revenues, including 20% of business rates revenues going to mayors from next year, and a share of income tax receipts from 2028. On income tax this will be achieved without powers to vary it or thresholds which would add complexity to the tax system. More predictable funding should help mayors plan beyond short-term funding cycles and develop the infrastructure and regeneration projects businesses need, supporting the CBI's call for stronger mayoral investment pipelines.

The Chancellor announced £20.4bn of additional funding for public financial institutions, including £15.4bn for the National Wealth Fund and £5bn for the British Business Bank. Greater public co-investment capacity should help de-risk projects and crowd private capital into infrastructure, clean energy and growing businesses, aligning with the CBI's Budget call to mobilise private capital through stronger investment pipelines.

The Budget exempts residential brownfield developments of up to 1.5 hectares in England from Biodiversity Net Gain requirements and commits to no major changes to building regulations for the remainder of Parliament, except where necessary to improve building safety. This should reduce costs on smaller brownfield schemes and give developers greater certainty to invest, responding to member concerns about cumulative regulatory costs and policy uncertainty holding back development.

An additional £1.5bn will support around 10,000 social and affordable homes in England, taking investment through the Social and Affordable Homes Programme above £40bn over ten years, alongside £4.7bn for the Your First Home scheme. A stronger housing pipeline provides greater certainty for developers and supply chains while helping tackle housing shortages that can constrain local labour markets and businesses' ability to recruit.

The Budget commits government to developing a pipeline of private finance opportunities, including public-private partnerships, initially in defence where they demonstrate value for money, alongside an Innovative Defence Financing.

For business, this is an important shift towards using private capital and expertise alongside public investment to increase delivery capacity at a time when the public finances alone cannot fund the UK's investment needs. It supports the direction of the CBI's call for a modern public-private partnership model, while leaving an important next step for government to develop a clear, repeatable framework that can be applied to infrastructure and regeneration more widely.

The response to the consultation on accelerating electricity network connections for strategic demand marks an important step towards addressing demand-side connection challenges, recognising that policy attention has historically focused more on generation than on the growing demand for network capacity. It is positive that the government acknowledges long connection queues are constraining investment, economic growth and industrial decarbonisation, and is introducing measures intended to accelerate connections for strategically important projects. However, the success of the new prioritisation mechanisms will depend on clear and transparent eligibility criteria, predictable decision-making and accelerated delivery of network infrastructure. 

Businesses will also welcome efforts to tackle speculative demand in the connections queue, particularly confronting concerns around data centre applications holding capacity. The proposed reforms, alongside the development of the Government's Data Centre Covenant, should help ensure scarce network capacity is allocated to viable projects that deliver economic and strategic value. 

The CBI also welcomes the creation of Great British Grid and its ambition to accelerate delivery of key network projects, and stands ready to work with Government, Ofgem, NESO and industry to ensure it supports faster connections, provides certainty for investment and delivers the grid capacity businesses need to invest and electrify.

The CBI welcomes HMRC’s decision to adopt a longer and more flexible timetable for modernising company tax returns, reflecting concerns that the original timelines did not allow sufficient time for co-creation, testing and managing additional burdens. This is a positive example of government responding to business feedback and prioritising a proportionate, workable approach.

The government has reduced the project value hurdle for the new Advanced Tax Certainty Service (ATCS) from £1bn down to £300m, significantly widening the range of projects which will benefit from this service. The CBI had recommended the threshold was reduced to at least £300m (with a member preference for £200m). 

The government's announcements relating to skills and youth employment were fairly limited and focused on trailed announcements, including the commitment to expand the local government apprenticeship service to all current mayors. The reason for this is the government waiting for the Milburn and Timms Review reporting in November 2026. The government has confirmed that it will respond to these reports by the end of this year, with a white paper and legislation to follow in 2027. 

Support for business AI adoption is spread across many departments and initiatives, with no clear owner for progress, which makes it harder for firms to move from pilots to deployment. The new AI Pathfinder Fund focuses on barriers within the government, meaning measures for business risk stay fragmented. A more coordinated approach, as we called for, aligning existing initiatives through a shared roadmap and scorecard, would help more firms capture the benefits of AI.

The commitment to develop public-private partnership opportunities is welcome, but it is currently narrower than the CBI's ask for a modern PPP framework capable of mobilising private capital across infrastructure and regeneration. Government should build on the Budget by working with business to establish the commercial principles, risk allocation and delivery models needed to give investors confidence and create a pipeline of investable partnerships.

New funding for mayors, the National Wealth Fund and British Business Bank significantly increases the financial tools available, but businesses ultimately need visible, long-term pipelines of commercially viable projects. Government, mayors and public financial institutions now need to join these interventions up so investors can see where opportunities are coming and commit capital with confidence.

Firms need their people to have the confidence and skills to use AI safely and effectively if they are to adopt it at pace. The Budget re-establishes the Union Learning Fund and supports skills through the local pilots, but there is still no shared baseline for the everyday AI skills workers need. A UK AI Literacy Standard, as we called for, would give employers and workers that common benchmark.

Greater regulatory certainty and the brownfield Biodiversity Net Gain exemption should improve development viability, but businesses will only see the full benefit if projects can move through the planning system more quickly. Government needs to ensure planning authorities have the capacity and capability to turn reform into faster decisions and delivery.

While the brownfield exemption reduces costs for smaller housing schemes, Biodiversity Net Gain becomes mandatory for Nationally Significant Infrastructure Projects from November 2026. Implementation needs to be predictable and proportionate so environmental gains are delivered without adding unnecessary costs or delays to nationally important infrastructure.

A stronger strategic role for procurement is welcome, but innovative businesses will judge success by whether government actually becomes easier to sell to. Departments need the capability, incentives and appropriate risk appetite to buy innovative solutions, with Procurement Innovation Champions empowered to translate policy ambition into practical changes in competitions and contracts.

Devolution was clearly a major area of focus across multiple topics; as the devolution of skills planning and provision progresses, we'll be wanting member input on where devolution is positive, and where aspects are better kept centralised.

The Chancellor confirmed that Alan Milburn and the Timms panel would publish their final reports in November, with a government response before the end of the year, and a white paper and legislation to follow in 2027. We expect to see more measures proposed around skills, the future of work, apprenticeships, and youth employment at this point, and will continue to engage with the government in the meantime and update members when we hear more around timing/content. 
To find out more and get involved, please reach out to CBI Senior Policy Adviser Evie Matthews.

We will engage with government on Good Growth funding, the £1.5bn borrowing facility and the Fiscal Devolution Roadmap to help ensure new powers and funding translate into investable opportunities that crowd in private capital. On fiscal devolution specifically, the CBI will press for simple revenue allocation using existing government data, with no additional payroll, employee location or other business reporting requirements. Members can find out more and get involved by reaching out to Simon Dishman, CBI Policy Manager. 

• Turn procurement ambition into practice: We will seek clarity on how Back British and social value requirements will operate in practice, pushing for an approach that gives suppliers certainty, supports UK capability and investment, and avoids unnecessary complexity or barriers to competition.
• Keep the pressure on planning and delivery: We will test the Biodiversity Net Gain and building regulation changes with developers and investors and continue making the case for sufficient planning capacity, greater certainty and proportionate regulation.
• Use member evidence to shape implementation: We will gather practical examples of projects struggling to secure investment, barriers to selling innovative solutions to government, planning and regulatory constraints and businesses' experiences of investing alongside national and local government, using this evidence to show where implementation needs to improve.
• Mobilise private investment: We will continue pressing for a modern public-private partnership framework and stronger national and mayoral investment pipelines, building on the CBI's work with Browne Jacobson on future partnership models. 

To get involved in our work on planning and procurement, reach out to Nicky Williams, CBI Policy Manager.

The CBI will review the implications of the government's strategic demand connections reforms and work closely with NESO to help businesses navigate the new connections landscape. Particular focus will be placed on the rollout of the Connections Accelerator Service (CAS), ensuring businesses understand eligibility criteria, prioritisation processes and the practical opportunities these reforms create for accelerating investment, electrification and industrial decarbonisation.

The Budget confirmed an additional £120m for the AI Security Institute to strengthen the UK’s frontier AI evaluation and testing capability and advance technical best practice for secure AI. This should give businesses greater confidence that the AI adopted is safe and reliable, helping them move from pilots to deployment. This supports the calls in our report The Adoption Decade for trusted, responsible AI adoption underpinned by global standards that build on the Institute’s evaluation capability.

The government re-committed to delivering the Regulating for Growth Bill and its cross-sector sandboxing provisions that will improve the agility of the regulatory system, while maintaining appropriate safeguards. This should support businesses to bring innovative products and approaches to market more quickly in the UK, and reflects the CBI and members’ support for the Bill and calls to progress this work at pace.

The government committed to increased use of challenge-led procurement, providing an additional £80m for SovAI’s Procurement programme, and appointing an external Chair for the Commercial Innovation Hub (CIH). These steps should help make the government a better first customer for innovation, give new technologies a stronger route to market in the UK, and support innovative firms to invest and scale in the UK. This directly delivers against the CBI’s calls in our Innovation Investment report and Budget submission to drive outcomes-based procurement and scale the CIH.

The Autumn Budget backs innovative and high-growth businesses with a package to improve access to finance including £2bn of targeted British Business Bank support, including £1.4bn for equity funds and £450m for venture debt, the new Scale UK Connect pilot connecting 200 high-growth firms with expert advice, investors and international opportunities, and a new UK Export Finance guarantee for SMEs. Alongside efforts to mobilise pension investment through the Mansion House Accord, these measures will help growing UK businesses attract talent, access deeper pools of domestic capital and overcome barriers to scaling and staying in the UK. 

This supports the CBI’s Budget call to mobilise more private capital into productive investment and for a tax system that encourages entrepreneurship, risk-taking and investment, while advancing our wider capital markets ambition to strengthen the pipeline of UK businesses able to start, scale and ultimately access public markets.

The Autumn Budget confirmed that UKRI will focus £1bn of investment over the next four years on innovation clusters aligned with the Industrial Strategy, with the Local Partnerships Innovation Fund (LIPF) devolved to mayors from 2028, and new public-private investments announced in life sciences and aerospace. These announcements confirmed the government’s commitment to using public R&D investment to accelerate regional business investment and growth, and the LIPF devolution demonstrates one route delivering this ambition.

The government has announced a package of tax measures to encourage entrepreneurs to start and scale their businesses in the UK, including increased generosity and simplifications for employee share schemes, and simplifications for R&D tax relief administration. A slight reduction in business asset disposal relief should be offset by a new CGT founders’ relief, targeted at founders and early investors of high growth.

For founders deciding whether to start or scale a business in the UK, this should make hiring easier and encourage them to grow business to a larger size before exiting. The changes to share schemes reflect CBI recommendations in our response to the Call for Evidence on Tax Support for Entrepreneurs, and R&D simplifications were suggested to HMRC and Treasury by our Innovation Tax Working Group. 

The Chancellor confirmed that the Defence Investment Plan will be fully funded. This should help crowd in capital, talent and innovation across government, industry, academia and finance, strengthening UK security while supporting business growth and long-term productivity. It responds to the CBI’s continued call for a fully funded plan, building on our work that started with the Defence and Economic Growth Taskforce.

The Budget acknowledges industry calls to cut Stamp Taxes on Shares, recognises the potential competitiveness benefits, and keeps a reduction under review.  A reduction was not delivered at this Budget, but Government’s recognition of the case provides an important opportunity to tackle a longstanding friction affecting UK equities. Building on the CBI’s call for a tax system that encourages investment and risk-taking, we will work with Government to develop the evidence and a pathway towards eventual removal. 

The Budget provides funding for the Northern 500, creating a group of ambitious mid-sized businesses to help strengthen private investment and growth across the North. This closely reflects the CBI's Northern Growth Strategy call to build a northern "Mittelstand", a deeper base of ambitious medium-sized businesses rooted in the North, making this one of the clearest matches between a specific CBI recommendation and government action. 

Firms remain uncertain about how existing rules apply to AI, particularly where more than one regulator is involved, and this slows adoption. The Regulation for Growth Bill will help firms test new technologies, but there is still no simple route to clear answers from regulators. A 'no wrong door' route, as we called for, with regulators resourced to deliver it, would give firms the clarity to move faster.

Established innovative firms play a key role in supporting scaling firms to grow and remain anchored in the UK, through partnerships, investment, and as a market for innovation. The government published an Entrepreneurship Prospectus alongside the Budget outlining a comprehensive package of support for firms to start, scale, and remain in the UK, but the role of large firms is absent. As part of our Scale and Retain programme, the CBI will be outlining steps government could take to support partnerships between large and scaling firms to accelerate innovation and scale.

The reprioritisation of funding from DESNZ to the Defence Investment Plan risks increasing uncertainty for businesses and investors seeking clarity over the long-term support available for capital-intensive energy and industrial projects. Whilst continued funding for the Viking Cluster and hydrogen projects in the Teesside, Merseyside and North Wales clusters is welcome, wider reductions to hydrogen and CCUS grant funding could delay critical investment decisions. 

The government's commitment to explore loan and equity financing for future CCUS and hydrogen projects, including the Acorn Cluster, and the potential availability of up to £300m for strategically important hydrogen projects are positive signals. 

However, with a £500m reduction in hydrogen capital grants and future support still subject to value-for-money assessments and future spending review decisions, businesses face continued uncertainty over the scale, timing and delivery of support. The government should provide greater clarity on future funding mechanisms, allocation decisions and delivery timelines to enable businesses to invest with confidence and accelerate industrial decarbonisation. 

The CBI’s Scale & Retain project is a year-long programme bringing together businesses from across the economy to make the UK a better place to scale and retain innovative firms, with work focused on growth finance, regulation of innovation, procurement of innovation, partnerships between large and scaling firms, and championing UK scale-up success. 

We’ll continue to bring this cross-economy voice to the government, pushing for commitments, including those announced today, to be delivered in a way that works for business, with upcoming work on the Regulating for Growth Bill, procurement of innovation in partnership with the Commercial Innovation Hub, and large-scaling firm partnerships.

Get in touch with Nicola Eckersley-Waites to get involved in these opportunities or the project more broadly.

Following our report The Adoption Decade, the CBI will continue to work with government and members to make safe, responsible AI adoption the foundation for growth across the economy. 

We will keep campaigning for a time-limited Business AI Adoption Delivery Group, and for the commitments announced in the Budget to be delivered in a way that builds trust and works for business. That includes engaging on the local AI partnership pilots, and on how AI infrastructure is delivered so that it supports growth across the wider economy, as well as the development of standards for safe and secure AI. 

We will also contribute business evidence to the AI Economics Institute’s research and continue to make the case for the skills support workers need to use AI safely and effectively and to manage the transition as roles change. 

Get in touch with Shivani Gupta to get involved through our AI and Data Protection Working Group to share evidence or get involved.

Looking ahead to the Spending Review, we will continue to work with government and members as government look to a target of spending 3% and then the NATO target of 3.5% of GDP on defence. To get involved with the CBI's work in this area, contact Helena Coe, Policy Manager.

We will continue to make the case for a clear and investable long-term strategy for CCUS and hydrogen, recognising their importance in decarbonising heavy industry, attracting investment and supporting economic growth. Working alongside government and industry partners, we will seek to ensure that future policy frameworks provide the certainty, pace and scale required to progress projects, strengthen industrial clusters and deliver the low-carbon infrastructure needed for a successful energy transition.

The CBI will work with members to ensure new reliefs are effective, including by responding to the technical consultation on the new Founders' Relief. To get involved in discussions via the Innovation Tax Working Group, contact Alice Jeffries, Tax Policy Manager.

What the Budget means for Scotland
Beyond the UK-wide measures, the Budget includes a set of Scotland-specific announcements and an additional £600m for the Scottish Government through the Barnett formula between 2026-27 and 2029-30. What that means for Scottish businesses will now depend on the choices made at the Scottish Budget on 3 December.

Backing Scotland’s defence sector, from skills to supply chains
The UK and Scottish Governments are jointly providing £20m for two Defence Technical Excellence Colleges, one in the east and one in the west of Scotland. Employers gain a pipeline of skilled recruits, and school leavers a direct route into well-paid, long-term careers in one of Scotland’s strongest sectors. We have called for more routes into work for young people and, through the CBI’s Defence and Economic Growth Taskforce, for defence investment to drive wider growth. Joint investment in skills by both governments answers both calls. 

Fully funding the £15bn Defence Investment Plan for 2026-27 to 2029-30, including £4.7bn that was previously unfunded, gives the industry the certainty to plan and invest. The National Wealth Fund and British Business Bank will also deploy up to £5bn over four years into defence and dual-use sectors, opening up finance for Scotland’s supply chain. That supply chain already benefits from more than £2.5bn of UK Government defence investment this year, including the first Type 31 frigates at Rosyth and the £50m Scotland Defence Growth Deal. 

Edinburgh to lead the UK’s new £18m chip design academy
The Budget provides £18m for a UK Advanced Chip Design Academy, led by the University of Edinburgh and hosted within its Centre for Electronics Frontiers and the Scottish Microelectronics Centre. Researchers there will take new semiconductor designs from prototype to fabrication and testing. 

By shortening the path from research to production, the academy will build the chip design skills that AI and quantum computing depend on. It will also give UK tech firms a route to turn their designs into physical silicon, with that capability based in Scotland. We called for public investment that supports commercialisation, with universities and research centres acting as routes for new technology into business. The academy is designed to close that gap between lab and production. 
 
A route for the Scottish National Investment Bank to invest at greater scale
The UK Government will accelerate the Scottish National Investment Bank’s designation as a Public Financial Institution ahead of the 2027-28 financial year. It has also committed that devolved governments will receive their fair share of the expansion in Financial Transactions funding. 

Designation will put the Bank on a similar footing to the National Wealth Fund and British Business Bank, which could open up more flexible funding to back Scottish projects and growing firms at greater scale. This reflects CBI calls for public financial institutions to be better coordinated around productive investment, and for devolved leaders to have the tools to crowd in private capital. This brings Scotland’s own investment bank into that system. 

A new outdoor events space for Glasgow’s SEC
The Budget provides £6m from 2027-28 for a new outdoor events space at Glasgow’s Scottish Event Campus, subject to a business case. Greater capacity to host major events would bring more visitors and spending into Glasgow’s important hospitality and visitor economy. Our submission argued that regeneration depends on investment in the places and public spaces that draw people and spending in, and this is a targeted example in Scotland’s largest city. 

Westminster and Holyrood must work together to unlock Scotland’s potential
This Budget shows what is possible when the UK and Scottish Governments pull in the same direction, with several of its wins for Scotland, from the jointly funded defence colleges to the Scottish National Investment Bank’s designation, depending on exactly that. Too often, though, businesses face competing priorities and mismatched timelines between the two, and investment goes wherever the path is clearest. The Budget commits only to exploring how the benefits of greater regional empowerment can reach Scotland. Our members need the two governments to agree shared priorities for Scotland’s key sectors and back them with joint investment and aligned delivery. When both governments row in the same direction, Scotland wins the investment, along with the jobs and opportunity that come with it.

Acorn carbon capture project still waiting for a funding decision
The Budget prioritises carbon capture and hydrogen grant funding for Teesside, Merseyside and North Wales, and keeps grant support for the Viking cluster. Acorn, the proposed project by St Fergus by contrast, is offered only the prospect of loan or equity investment. We called for the Acorn project to be progressed, building on the £200m committed at the 2025 Spending Review, because it is central to decarbonising Scottish industry and anchoring the energy transition in the North East of Scotland. Until its funding route is confirmed, the businesses planning around it cannot commit investment with confidence. 

Energy Profits Levy to stay until 2030 
The approval of the Jackdaw gas field just days before the Budget is welcome: the UK Government expects it to create 27 new direct jobs and safeguard 273 more. So is the legislation confirming the Oil and Gas Revenue Levy as the long-term successor to the Energy Profits Levy (EPL). But the EPL will remain until April 2030 unless the price floor is triggered sooner, more than three years after the January 2027 start we called for. Investment in the North Sea is planned years ahead, so every extra year of the EPL weighs on the decisions that sustain supply chain jobs across the North East of Scotland. That comes just as the new Energy Wealth Fund is being linked to future North Sea revenues. Bringing the Oil and Gas Revenue Levy forward to 2027 would give the basin the certainty it needs to keep investing.

Business is clear that neither Westminster nor Holyrood can grow the economy alone; the two governments must start pulling in the same direction if we are to see Scotland reach its full economic potential. Now is the time to move from announcements to action and delivery to unlock growth, jobs and opportunity in every part of Scotland. 

The Scottish Budget on 3 December is the next big moment for Scottish business. With an extra £600m in Barnett consequentials, the Scottish Government must now use the levers it holds to drive growth: a planning system that moves at the speed of investment, skills programmes that close persistent gaps, and non-domestic rates reform that rewards growth rather than penalising it. 

Working with the UK Government, it should also co-invest in the sectors where Scotland can lead, from clean energy and defence to advanced manufacturing, life sciences and tech.

CBI Scotland will continue its engagement with both governments on these issues and the priorities for business. To get involved with the CBI in Scotland contact Chris Kelly, Head of Policy for Scotland.

£270m boost to funding through the Barnett formula
The Northern Ireland Executive will receive an additional £270m in Total Departmental Expenditure Limit (TDEL) funding as a result of decisions taken at Budget 2026 and the application of the Barnett formula. This is on top of the Spending Review 2025 settlement and an additional £740m TDEL allocated at Budget 2025 and Spring Forecast 2026.

Measures to back growth in Northern Ireland
Two Northern Ireland-specific measures were announced to support economic growth:

• £7.5m of new R&D investment for Queen’s University Belfast’s Centre for Secure Information Technologies (CSIT) Cyber AI Hub. 
  £1m of new funding for a Northern Ireland Investment Summit to promote investment and showcase opportunities in high-growth sectors. 

We also welcome the additional £20.4bn of capital for the National Wealth Fund and British Business Bank, alongside the commitment to work with local leaders to identify growth-boosting projects across Scotland, Wales and Northern Ireland through the new £80m Local Renewal Fund.

Other measures to support the rising cost of doing business and living

• The extension of the 5p cut to fuel duty for a further six months, until 1 July 2027, and the extension of the 3.7p cut to red diesel duty will be welcomed by motorists, farmers, hauliers and other fuel-intensive businesses across Northern Ireland.
• The suspension of tariffs on more than 100 food products, including chocolate, combined with tariff suspensions introduced earlier this year, should help reduce costs for consumers. This is particularly welcome in Northern Ireland, where disposable household income per head remains significantly below the UK average.
• Funding will also be provided to the NI Executive for support comparable to the temporary VAT reduction on domestic electricity, and NI will also receive Barnett funding relating to the £2.6bn Household Energy Payment. 

Ongoing need to address energy costs
Northern Ireland businesses continue to face significant energy cost pressures. We therefore welcome the funding being provided to the Northern Ireland Executive to deliver a scheme comparable to the British Industrial Competitiveness Scheme.

However, this support will not reach all businesses. A broader policy framework, backed by appropriate support schemes, is needed to accelerate Northern Ireland’s transition to a secure, affordable and low-carbon energy system. This is essential to strengthening business competitiveness, improving investor confidence and supporting sustainable economic growth.

Long term funding model for Northern Ireland
A key priority for Northern Ireland businesses is also the delivery of ambitious economic leadership. That means turning the Programme for Government into action through a clear delivery plan, with measurable milestones, defined timescales and a sustainable long-term funding model.

The immediate priority must be agreeing a Budget for 2026–27, providing businesses with the certainty and confidence they need to plan, invest and grow.

The CBI recognises that economic growth is essential to creating a stable fiscal future and generating the revenues needed to support public services. We will continue to work with the Northern Ireland Executive to boost local investment and create an economic environment in which businesses can thrive.

We will also work with UK Government officials to help ensure Northern Ireland businesses can access support from the National Wealth Fund and British Business Bank, and that Northern Ireland benefits fully from the Local Renewal Fund.

As further details emerge, we will engage with the Northern Ireland Executive and local officials on how funding provided through the Barnett Consequential will be allocated, making the case for investment in the areas that can best support economic growth.

Get involved: If you would like to find out more about our work in Northern Ireland, including opportunities to get involved in working groups and actively shape key CBI policies, please contact Claire Sullivan.