The Growth Forecast - Budget 2024 Briefing

The Chancellor Rachel Reeves delivered the first Labour budget in 14 years this lunchtime, making history for the first ever budget delivered by a female Chancellor in the UK. The Budget, which is set to influence the agenda for years to come, sees significant tax rises totalling £40bn, but also new investments in some public services such as the NHS and Education.

There will be a range of schemes to support businesses in the next year, including:

• The extension of the Made Smarter Innovation programme with up to £37 million funding in 2025-26. Funding for the Made Smarter Adoption programme will double to £16 million in 2025-26 to support more small manufacturing businesses to adopt advanced digital technologies.
• The UK Shared Prosperity Fund will continue at a reduced level for a transition year through £900 million for local authorities to invest in local growth in advance of wider funding reforms.
• Over £1bn has been confirmed across 2024-25 and 2025-26 for the British Business Bank to enhance access to finance for small businesses, including through small business loans programmes.
• Over £200m will go towards wider small business support, including through Growth Hubs and Help to Grow Management.

Funding will also be increased to support particular sectors of the economy. Some announcements include funding to support science and technology R&D; an extension of the Innovation Accelerators programme in the Glasgow City Region, Greater Manchester and the West Midlands; over £2bn R&D and capital funding to support the automotive sector over 5 years; nearly £1bn in R&D funding for the aerospace sector over 5 years; up to £520 million for a new Life Sciences Innovative Manufacturing Fund; and tax relief support for the UK’s creative industries.

Some of the key announcements from the Budget relating to business include:

• From April 2025, there will be an increase in the National Living Wage for all eligible employees to £12.21 per hour. The National Minimum Wage for 18-20 year olds will increase to £10.00 per hour for eligible workers.
• There will be no increases to National Insurance, VAT or Income Tax for workers.
• There will be an increase in Employers National Insurance Contributions by 1.2% from 13.8% to 15% from April 2025 – meanwhile, the level at which employers start paying national insurance on an employee's salary will fall from £9,100 per year to £5,000. At the same time, the Employment Allowance will be increased to support the smallest businesses.
• Corporation Tax will be capped at 25% for the duration of the Parliament.

The Office for Budget Responsibility (OBR) has predicted that the UK economy will grow by 1.1% this year and 2% in 2025.

Supporting businesses and local economies to find and achieve growth potential will continue to be vital moving forward. Growth Flag is supporting local places to efficiently direct resources for the maximum impact, using innovative data to support evidence-based interventions in local economies. Using the very latest live data, Growth Flag provides insights on where growth potential exists in local economies, currently with over 90% accuracy, allowing targeted support and strategic activity.

As the Budget settles, we’ll continue to develop more insights on supporting the growth of local economies across the country. We’ll also be releasing new analysis in the new year on growth potential in sectors and throughout the UK in our Annual Report, launching on 16 January 2025.

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