What the 2026 Spring Budget means for small businesses

On Tuesday, 3 March 2026, Chancellor Rachel Reeves made her highly anticipated Spring Budget speech.

The Chancellor is the government's chief financial minister, and the Spring Budget is their opportunity to set out plans for the UK economy.

Every year, the Chancellor of the Exchequer typically makes two speeches to the House of Commons to outline the government’s financial agenda: the Autumn Statement and the Spring Statement, sometimes called Autumn and Spring ‘Budgets’.

This year's statement was primarily focused on defence spending, public spending and immigration. As such, there were few definitive policies laid out in the chancellor’s speech that will affect small businesses, the self-employed and landlords.

That said, the overall financial climate of the UK is often dependent on what’s happening across the globe. With many shifts happening across the world, this year's Spring Budget is certainly not one to miss.

The global context

This year’s statement comes against a backdrop of war in the Middle East. The events across the region began on 28 February — just three days before the Spring Statement was announced to parliament — and have led to oil prices rising sharply in recent days.

It’s still unclear how long energy prices will stay volatile. But if they remain high, economists say the chancellor may struggle to end the fuel duty freeze as promised at the next Budget.

What’s the overall economic forecast?

On the same day, the Office for Budget Responsibility (OBR) — the body that monitors public spending — publishes its assessment of the plans. As the independent public finances forecaster, this is their independent assessment of the expected impact of the policies announced in the statement.

These predictions may not come to pass, but it’s effectively a best guess.

The OBR predicted the UK economy would grow by 1.1% this year, a downgrade from the 1.4% predicted in the Autumn Budget from November 2025. It expects the economy to grow to 1.6% in 2027 and 2028, then drop to 1.5%in 2029 and 2030.

What does this mean for businesses?

As growth slows, businesses may see less demand from customers. Investment may fall, and budgets may tighten. This could be especially tough for businesses selling luxury or non-essential products and services. Some companies may need to pause hiring or delay plans to expand into new markets.

What about inflation?

In its statement, the OBR also forecast that inflation is set to fall more quickly than previously thought. It’s expected to reach 2.3% this year and drop to the Bank of England’s target of 2% by the end of the year.

Inflation is essentially a measure of how much prices have increased across the economy compared with the previous year. The Consumer Price Index (CPI) — one measure of inflation — rose by 3.2% in the 12 months to January 2026. That’s down from 3.6% in the 12 months to December 2025.

You can read more about how the Office for National Statistics (ONS) calculates the CPI on their website.

What does this mean for businesses?

Falling inflation should be a positive sign for UK businesses. It can mean a more stable economy, lower costs and customers who feel more confident about spending.

Unemployment rates

The OBR also makes forecasts on unemployment rates. This year it predicts that unemployment could reach 5.3%. That’s 0.4 percentage points higher than last year’s forecast of 4.9%.

In her speech, Reeves said that the Government is taking unemployment seriously, and investing “to reform apprenticeships to prioritise young people and through the £820 million Youth Guarantee.”

The Youth Guarantee scheme launched in December 2025 and will create 350,000 training and work opportunities for young people on Universal Credit. The roles are in sectors including construction, health and social care and hospitality, and will help young people build practical skills, grow their networks and get support with CVs and interviews.

Learn more about hiring apprentices in our guide.

What does this mean for businesses?

Higher unemployment can be a mixed picture for businesses. On one hand, it means a larger pool of people looking for work, which is a great way to find talent.

Whereas on the other hand, it often means customers have less money to spend. This can hit demand, especially for non-essential products or services. If spending slows this year, some businesses may look for ways to cut costs or lower prices to stay competitive.

Interest rates

While interest rates weren’t included in the Spring Statement, they’re important to note here because of the war in the Middle East. The current rate is 3.75%, and the next decision is due on 19 March.

In the UK, the Bank of England sets a base interest rate. This is the rate it charges banks and lenders to borrow money. When the base rate changes, it often influences the interest rates banks offer on mortgages, loans and savings.

If the Bank of England raises the base rate, borrowing usually becomes more expensive. If it lowers the rate, borrowing tends to become cheaper. The Bank adjusts interest rates mainly to control inflation and keep the economy stable.

There is speculation that interest rates in the UK could rise above 4% if the war in the Middle East keeps energy prices high, a think tank has warned. The National Institute of Economic and Social Research (NIESR) said that if the energy shock from the conflict lasts for a year, the Bank of England may need to raise borrowing costs from the current rate of 3.75%.

Some mortgage lenders have reportedly already paused planned rate cuts due to growing economic uncertainty and the ongoing conflict in the Middle East, according to The Independent.

Over the longer term, average interest rates on existing mortgages are expected to rise from 4.1% this year to around 4.5% by 2030, although this is lower than the estimate made at the last Budget.

What does this mean for landlords and businesses?

Higher interest rates could increase borrowing costs for businesses and landlords with loans or mortgages. This may put pressure on cash flow and make investing, expanding or buying property more expensive.

Some parting thoughts

It seems that while businesses and landlords are less affected by the 2026 Spring Statement, global politics are having an impact on how businesses and landlords can grow in the coming months.

Overall, the latest forecasts from the OBR, outlined in Reeves’ 2026 Spring Statement, point to a mixed outlook for businesses. Growth has been downgraded, inflation is easing and unemployment is expected to rise.

For businesses, this creates both challenges and opportunities. A more stable financial backdrop and a larger talent pool could help some firms plan ahead. But weaker consumer demand may mean tighter budgets, tougher trading conditions and pressure to keep prices competitive.