Alastair Wilson, Tax Partner at UNW, shares his reflections on the forthcoming Autumn Budget and the pressures and challenges facing North East businesses as they look ahead to the Chancellor’s statement on 26 November 2025.
Chancellor Rachel Reeves will deliver the Autumn Budget on 26 November 2025, and businesses across the North East are preparing for the likelihood of tax rises and increased staffing costs.
A public finances gap estimated at £20–£40 billion, combined with high public debt and a fear of triggering unease in the financial markets, means the Treasury has limited room to manoeuvre. Tax rises, reductions in tax reliefs and restrained public spending are now widely expected.
Businesses in our region will hope for, but not expect, some form of positive news from the Budget. As context, the ICAEW carries out a regular “Business Confidence Monitor” survey and, in Quarter 3 (Q3), the North East confidence score was in deeply negative territory, mirroring the national score. Notably, recent business confidence scores have been consistently below the long-term regional average and reflect the lack of expected growth felt by businesses locally.
Levels of unemployment are increasing, and investment being reported in the region is also below historical norms. Businesses will therefore want a Budget that helps to change the trend, but the likelihood of that may be low.
The recent increases in the tax burden on businesses are a real challenge, and the Budget rumours in the press in recent weeks will not have alleviated the mood. Whilst the pressure on the UK’s finances is well known, measures such as reductions in the ability to use salary sacrifice, reductions or freezes in tax thresholds, or increases in business taxes generally are unlikely to result in anything other than additional cost or wage-inflation pressures.
Expected increases in the National Minimum Wage will, of course, benefit employees but will also add cost for businesses and, in some cases, reduce hiring. As the cost of hiring increases, businesses are applying a renewed focus on productivity measures, including increased investment in technology such as AI. This is a positive step for productivity, but it may also reduce hiring in a way that is permanent and predominantly impacts the younger workforce.
The region’s industrial base remains concentrated in manufacturing, automotive electrification, offshore wind, chemicals and an expanding digital and AI ecosystem. These sectors underpin the North East’s long-term competitiveness but also leave it exposed to tax rises that disproportionately affect high-employment and energy-intensive industries.
Manufacturing remains a key component of our regional economic strength. Nissan Sunderland remains a cornerstone of UK automotive output, and the £1bn EV36Zero programme, Envision’s gigafactory and JATCO’s powertrain facility position the region as a national centre for EV production. However, rising labour costs, changing tariffs, global automotive restructuring and ongoing market uncertainty continue to apply pressure.
The North East’s chemicals cluster also remains one of the UK’s most valuable industrial assets. Net Zero Teesside offers transformational potential but depends heavily on capital expenditure and stable energy policy. Without intervention, uncertainty around global tariff changes, rising wage costs and high energy costs risks undermining the viability of existing facilities and deterring investment, as seen with recent shutdowns.
The recent announcement of the North East as an AI Growth Zone, including major data-centre investment, is expected to unlock a significant number of jobs. However, for North East founders and scale-up businesses, the UK’s R&D tax policy, CGT rates on exits and a lack of a cohesive business-growth support system remain key sensitivities for scaling technology businesses.
In hospitality, leisure and retail, a fundamental reform of business rates with the aim of supporting the success of our high streets would be welcome.
There are many steps the Government could take to encourage businesses to invest or to spur growth. However, businesses in our region are more likely to fear that this Budget will be shaped by fiscal necessity. An expectation of rising employer costs, potential personal tax increases through further fiscal drag, and a lack of investment incentives will test the resilience of regional businesses.
However, what businesses definitely do not want is a Budget that lacks bold decision-making, adds complexity, and promises no further tax increases but ultimately leads to more rises next year.
UNW’s summary of the key Budget announcements will be published on our website the day after the Chancellor’s statement.
