Budget eases small firms, but AI & hiring fears stay

Business leaders said the Autumn Budget offered some relief for smaller firms but left major concerns over energy costs, AI adoption and hiring. Their comments followed measures on business rates relief, trading allowances and local AI partnerships.

Several executives said the package recognised the pressure on small companies, but argued that practical barriers to growth remained unresolved. They pointed to operating costs, limited support for using AI in day-to-day work and weak confidence around recruitment.

Dr Anand Verma, Founder and Chief Executive Officer of ExpectAI, focused on the effect of energy costs and infrastructure on smaller companies. He argued that tax and allowance changes alone would not improve survival prospects for many firms.

"Increasing small business rate relief is long overdue. Tripling the trading allowance and introducing the young entrepreneurs allowance means people can finally take the step to run their own business, but the Government has forgotten the costs they will still incur and the inadequate energy infrastructure that remains a crucial factor in SME survival rates. This still does not favour small business success or the SMEs that are crucial to larger supply chains. It opens doors but does not ensure they remain open," said Dr Anand Verma, Founder and Chief Executive Officer of ExpectAI.

Verma also said the Budget placed greater emphasis on AI security than on incentives for smaller firms that want to use the technology in routine operations. He said that gap could limit the wider economic effect of AI spending.

"A nation that leads on AI security should also lead on putting AI to work. There was nothing today that rewarded the use of AI in small businesses to run operations. AI can give a 10-person team the reach of a firm 10 times its size. That is how SMEs compete, grow and create jobs. The Budget protects the technology, not its use," Verma said.

Justin Smith, Chief Financial Officer and Co-Founder of jaam automation, said the Government had shown clear intent on AI infrastructure. He said the main issue now was whether businesses could turn that investment into higher output and stronger growth.

"The Chancellor's Budget announcements show that the UK has big ambitions to strengthen its AI infrastructure, but the real test will be how effectively businesses turn that investment into productivity and growth. The £30 million committed to kickstart local AI partnerships is a step towards encouraging adoption, but we must also address the practical challenges businesses face in putting AI to work. SMEs face significant financial and practical barriers to AI adoption, from implementation costs and skills shortages to integrating new technology into existing operations. Investment in infrastructure and AI development alone will not overcome these challenges. If the Government wants AI to deliver meaningful productivity gains, it needs to help businesses make the leap from experimentation to implementation. Targeted financial incentives, practical support to integrate AI into existing workflows, and clear guidance on governance and security would help SMEs invest with confidence and turn AI ambition into measurable commercial returns," said Justin Smith, Chief Financial Officer and Co-Founder of jaam automation.

His remarks echoed a broader concern among smaller businesses that national AI policy still does not address the cost of adoption within individual companies. For many firms, the barriers lie less in access to the technology than in the money, time and skills needed to embed it in existing processes.

Hiring pressure

Dave Lee, Chief Executive Officer of Planday, said labour market outcomes would be an important test of the Budget, particularly for younger people seeking entry-level work. He pointed to hospitality as a sector with the potential to absorb more workers if employers felt able to hire.

"The Chancellor promised a Budget aimed at supporting the 'working people of Britain', and that ambition must include helping the next generation into work. With nearly a million young people outside employment, education or training, hospitality can offer an important route into a first job, provided businesses can afford to recruit," said Dave Lee, Chief Executive Officer of Planday.

Lee said rates relief could improve the picture for some small employers, but argued that hiring decisions depended on confidence in the overall cost base and the ability to offer stable hours.

"The new threshold for small business rates relief could help, but employers need enough confidence in their costs to commit to recruitment and offer meaningful hours. A vacancy alone is not enough if the work available is too unpredictable to cover the cost of living," Lee said.

He said the quality of employment should matter as much as headline vacancy numbers.

"Success should be measured in jobs people can build on, as well as vacancies filled," Lee said.