What the Spring Statement really means for Entrepreneurs

Rachel Reeves delivered her 2026 Spring Statement to the House of Commons today, against a backdrop that was anything but quiet. A joint US-Israeli military strike on Iran has sent oil prices climbing, inflation risks are resurfacing, and economic growth has come in weaker than expected. And yet, true to her word, the Chancellor kept the statement deliberately low-key. No sweeping tax changes, no emergency spending announcements.

What the Statement did offer was a snapshot: an updated set of economic forecasts from the Office for Budget Responsibility (OBR), and a Chancellor keen to argue that the fundamentals are moving in the right direction. The question entrepreneurs are asking is whether ‘the right direction’ is moving fast enough — and whether the cost of getting there is falling disproportionately on those who create jobs and take risks.

Growth

The economy grew by just 0.1% in the final quarter of 2025, according to the Office for National Statistics, a shade below what had been anticipated. In early February, the Bank of England revised its 2026 growth forecast down to 0.9%, from a previous estimate of 1.2%. That compares with the OBR’s more optimistic November projection of 1.4% for the year – a figure now expected to be trimmed further in today’s updated outlook.

Reeves has pointed to the UK’s position as the fastest-growing economy among the European G7 nations as a sign that her strategy is bearing fruit. Economists at Deutsche Bank, previewing the statement, described their expectations as ‘no fireworks’, a deliberate settling of the mood after two major tax-raising Budgets in quick succession.

I work with entrepreneurs every day, and I can tell you that a 0.9% growth forecast does not feel like momentum. It feels like treading water. The people I advise are not waiting for a recession to worry, they are already making harder calls about whether to hire, whether to invest, whether now is the right time to exit. When growth is this marginal, confidence becomes everything. And right now, I wouldn’t say confidence is exactly abundant.

Inflation

Inflation has fallen substantially from its peak of 11.1% in October 2022 and came in at 3% in the year to January 2026 – its lowest reading since March 2025. The Bank of England, which currently holds rates at 3.75%, has signalled it now expects inflation to return to its 2% target over the coming months, partly as a result of energy price reductions and bill freezes baked in at the Autumn Budget.

The complication is Iran. The spike in global oil prices that followed this week’s strikes was not factored into the OBR’s forecasts, which were finalised days beforehand. If that oil price movement is sustained, it risks feeding back into transport costs, food prices and broader supply chains, just as the Bank was preparing to ease further.

Falling inflation is real and it matters. I’m not dismissing that. But here’s the thing: my clients aren’t experiencing lower inflation in any dramatic way in their P&Ls. What they are experiencing is the employer National Insurance changes from October, which for a business with, say, 20 staff at average wages, can represent an additional £30,000 to £50,000 a year in costs. That’s not abstract. That’s a decision about whether to take on your next hire or not. Lower headline inflation doesn’t offset that.

Unemployment: A five-year high

The unemployment rate hit 5.2% in the three months to December 2025 – the highest level recorded in almost five years. Wage growth has been decelerating, though average earnings are still running ahead of inflation, providing some cushion for households. The OBR’s revised jobs forecast is expected to reflect continued softening in labour market conditions through 2026.

A 5.2% unemployment rate will be spun as a structural adjustment. And maybe some of that is true. But I’m seeing something different in practice. I’m seeing employers who would normally be growing their teams actively choosing not to because the combined cost of hiring, of the NIC threshold changes, of complying with new employment rights legislation, has made caution the rational choice. That’s not a recession story. That’s a policy story. And it’s one that deserves an honest conversation.

Fiscal headroom

At November’s Autumn Budget, the OBR calculated that Reeves had £21.7 billion of headroom against her fiscal rules, the buffer between her spending plans and the point at which she would breach her self-imposed borrowing limits. That number attracted intense scrutiny at the time, given how thin it appeared relative to previous chancellors’ margins.

Analysts at Morgan Stanley, writing ahead of the statement, estimated that the headroom figure would remain at around £20 billion, with modest downward forecast revisions, higher current spending and stronger tax receipts largely cancelling each other out. A January surplus of £30.4 billion, the largest monthly surplus since records began in 1993, provided some reassurance heading in.

Notably, the OBR will not issue a formal assessment of whether the government is meeting its fiscal rules today, a departure from previous practice. Independent economists are, however, expected to produce their own calculations, and any significant narrowing of headroom will fuel speculation about what the Autumn Budget might need to do.

That headroom figure is the one I come back to when clients ask me whether more tax rises are coming. If it holds, the Chancellor has room to breathe. If growth disappoints – and with everything going on globally, that’s a real possibility – it shrinks. And when it shrinks, the pressure to do something at the Autumn Budget increases. The areas I’d be watching? Capital Gains Tax and Business Asset Disposal Relief. They were adjusted in 2024 and there’s still room, in the Treasury’s eyes, to go further.

Capital Gains Tax and exit planning

The 2024 Autumn Budget materially changed the landscape for business owners considering an exit. Rates on Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) increased, and the environment for succession planning shifted accordingly. Today’s statement was not expected to introduce further changes in this area, but the spectre of future reform hangs over every exit conversation.

The changes to Business Asset Disposal Relief have materially altered exit planning for owner-managed businesses. The lifetime limit reduction and rate increases mean that many entrepreneurs who have spent decades building a business will now receive considerably less on exit than they had planned for. We are working closely with clients on restructuring, gifting strategies and timing decisions but the honest message is that the goalposts have moved, and the tax cost of entrepreneurship in the UK has increased. That has consequences for risk appetite and long-run investment.

What should entrepreneurs take away

The Chartered Institute of Management Accountants, writing ahead of the statement, called on Reeves to use the Spring Statement as a moment to rebuild business confidence, develop a competitive tax framework for business, and deliver targeted support for the SME sector. Those calls have not been met today but then, they were never expected to be. This was a statement designed to hold steady, not to act.

The gilt market appears to have taken comfort from the steady tone: the ten-year yield recently touched 4.3%, its lowest point in over a year, reflecting some confidence that the UK’s fiscal position is not deteriorating sharply. For now, the storm clouds are on the horizon rather than overhead.

My practical advice to entrepreneurs after today is this: Don’t let a quiet Spring Statement make you complacent. The changes that are already in law – on NICs, on CGT, on employment rights – are significant, and the autumn could bring more. Use the next few months to review your structure, think about your exit or succession timeline, and make sure your investment plans are tax-efficient under the current rules, not the rules you remember from three years ago. The entrepreneurs who come through this period well won’t be the ones who waited. They’ll be the ones who planned.

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