Lord Philip Hammond, former Chancellor of the Exchequer, former Foreign Secretary, and former Defence Secretary, recently joined us to discuss the Autumn Budget 2025 and its implications for UK businesses and entrepreneurs. Drawing on his time managing the UK’s public finances and shaping economic policy, he shared a clear-eyed view of where the economy stands and what the Budget signals for the months ahead.
In this blog we share Lord Hammond’s insights and practical guidance for SMEs and entrepreneurs navigating a challenging but not impossible environment. For his take on sector-specific impacts, you can read our hospitality and retail piece here, and our property-focused blog here.
A budget focused on stability
The current Chancellor positioned the Budget as a step towards stronger growth and a more sustainable fiscal position. In Lord Hammond’s view, though, the measures fall short of materially changing the economic trajectory. As he notes, the OBR’s modelling reinforces this, showing only an almost immeasurably small uplift to growth.[1]
The UK’s long-term challenge remains productivity. Recent GDP gains have been driven largely by population growth rather than higher output per person, and the Budget does little to reverse that trend.
But for business leaders, there is a constructive takeaway: a stable macroeconomic environment, even if not growth-orientated, allows for clearer planning and more informed decision-making.
In uncertain periods, stability itself becomes an asset.
Rising taxation: what SMEs should note
Although the Budget included multiple tax increases, Lord Hammond highlighted one constructive point for business owners: this budget, unlike the last one, avoided disproportionately targeting businesses. For SMEs, this means that while the overall tax burden is rising, the measures are more evenly distributed across the economy, giving business leaders a clearer basis for planning.
The practical implications for entrepreneurs are straightforward:
- frozen thresholds
- higher dividend and property taxes
- reduced relief on salary-sacrifice pensions
These changes add pressure, but they also reinforce the importance of focusing on efficiency, cashflow resilience and productivity-enhancing investment. These are the areas where successful entrepreneurs tend to excel, and where many of the strongest UK businesses gain a competitive edge, especially during tougher economic periods.
Business confidence: a mixed picture, but opportunities remain
Confidence across the business community is understandably cautious. Higher costs and subdued growth expectations create headwinds, but this is also the environment in which some of the UK’s most resilient founders thrive.
As Lord Hammond highlighted, British entrepreneurs are resourceful and adaptive. The UK remains a strong hub for new ventures:
“We generate more start-ups relative to our population than any country except the United States.”
For early-stage founders and scaling SMEs, this is an important reminder: challenging economic periods often create the best openings with fewer competitors, more disciplined resource use, and stronger long-term positioning when the cycle turns.
At OakNorth, we see this every day. Businesses that continue to invest in operational strength, technology, and customer value now are building a foundation that will compound when conditions improve.
The key takeaways for entrepreneurs and SME leaders
- Plan for stability, not acceleration (for now)
With limited short-term growth stimulus, assume a steady but muted environment through 2026.
- Focus on productivity and efficiency
Investments in technology, automation, and smarter processes can help offset rising tax and wage costs.
- Diamonds are made under pressure
Entrepreneurs who can grow in a strained economy often become category leaders when conditions rebound.
- Leverage the right finance partners
Access to capital remains crucial. Tailored lending, scenario planning, and flexible credit structures can support businesses navigating rising costs and evolving opportunities.
Here at OakNorth, we continue to support ambitious businesses with the clarity, capital and banking tools they need to navigate uncertainty. Through our tailored lending and business banking offering, we help founders build resilience, invest in productivity and position themselves for long-term success. Even in challenging conditions, entrepreneurs are still innovating, scaling and creating opportunity.
And those who strengthen their foundations now are often the ones who thrive when the economy turns.
This article reflects the views shared in our recent conversation with Lord Philip Hammond. The content is provided for general information only and does not constitute and should not be relied upon as financial, tax or investment advice.
[1] https://obr.uk/docs/dlm_uploads/OBR_Economic_and_fiscal_outlook_November_2025.pdf
