Gravita and Santander UK present an analysis of the 2026 Autumn Budget and the economic outlook

Our third consecutive event with Santander UK brought together Tax Partner, Thomas Adcock, Santander UK’s Chief Economist, Frances Haque and Head of Risk Solutions, Nathan Hutchings for an analysis of the 2026 Autumn Budget and the economic outlook.

Following the Budget on 28th October, businesses face different challenges. Confidence in tax and spending plans is essential for longer-term investment. Persistent inflation continues to influence borrowing costs and commercial viability. Meanwhile, sustainable growth depends on improving productivity, engaging employees and making international trade easier.

Fiscal credibility underpins business confidence

The Budget delivered little overall fiscal change or immediate stimulus for growth. The longer-term position depends heavily on economic assumptions, with the Office for Budget Responsibility forecasting stronger growth in later years than the Bank of England. Weaker growth would leave a larger funding gap, while planned spending restraint could prove difficult to achieve.

The prospect of a ten-year plan from Andy Burnham raises questions about how a longer-term programme could be funded within existing tax commitments. A potential general election in 2027 might provide a fresh mandate for a different approach to taxation and spending, although further political uncertainty would complicate business planning.

Owners also face immediate decisions. Frozen tax bands mean more income is taxed at higher rates as earnings rise, while changes to company reorganisation rules could make succession planning more complex. Greater stability would support decisions about investment, restructuring and future ownership.

Inflation keeps pressure on financing

The UK economy has shown resilience, but energy costs and persistent services inflation complicate the outlook for interest rates. Supply chain disruption caused by geopolitical events adds another layer of pressure, as lower commodity prices do not necessarily translate quickly into lower costs for businesses.

Monetary policy seeks to prevent these pressures becoming entrenched through wage demands, business pricing and inflation expectations. Signs of labour market stabilisation matter because sustained wage growth could prolong inflation. Limitations in employment data make that judgement harder.

Issues faced by the property and construction sectors illustrate the commercial consequences. Borrowing costs, building costs and regulatory requirements are squeezing margins, leaving some developments financially unattractive.

Elsewhere, calm headline market indicators can conceal sharp movements in individual assets. Exposure to refinancing, interest rates and currencies therefore warrants attention as businesses prepare for potentially greater volatility.

Productivity depends on people and opportunity

AI investment is supporting economic activity. Its lasting contribution will depend on businesses translating that spending into stronger productivity, new products and revenue growth, supported by appropriate skills and infrastructure.

Employee sentiment is equally important. Declining willingness to go beyond core job requirements and “quiet quitting” raise questions about how work is organised. Increasingly process-driven roles can leave employees with limited scope to exercise judgement or initiative, weakening engagement and the motivation to contribute.

AI could create more interesting work, but younger people already face difficulties entering employment. Employers and education providers need to develop the skills and entry routes that will sustain the future workforce.

The proposed UK–EU reset offers another opportunity. Easier movement of goods and people, fewer administrative barriers and simpler cross-border transactions could support trade and M&A. Agreement and implementation remain uncertain, but the potential commercial benefits are significant.

At the same time, businesses moving entire teams overseas present a challenge for UK competitiveness. Retaining talent and investment depends on giving owners and employees confidence in their prospects here.

The outlook for UK businesses

Business resilience remains a strength of the UK economy. Sustained growth will require a clearer fiscal direction, investment that improves productivity and workplaces where people have the skills and scope to contribute. Greater certainty would give owners a stronger basis for pursuing opportunities in technology and international trade, and for committing to their future in the UK.