The hopes, expectations and concerns among investors about the UK Budget are rising ahead of the main event tomorrow.
A key point of focus is inevitably where capital can, and should be flowing into, and what the government should be doing to help it get there, with the budget playing a vitally important part in this process.
“Earlier this year, the UK investment ecosystem showed real energy, with founders optimistic, capital flowing and strong momentum,” said Amy Nauiokas, group CEO and general partner of venture capital firm Anthemis. “But that progress has since stalled.”
The UK, Nauiokas says, has an allocation problem. “The Autumn Budget is a crucial moment to ensure capital is deployed more effectively to drive growth,” she added.
Boosting growth is after all, what the chancellor set as her primary mission since taking office.
Thus far, this mission has proved to be Mission Impossible.
One only has to look at the Office for Budget Responsibility, which has clearly indicated a picture of slower than anticipated growth.
Furthermore, Nauiokas noted that while early-stage funding is improving, founders need support throughout their journey – especially at the growth and pre-profitability stages.
“We’re encouraged by the government’s support for more innovative investment models, such as venture debt, but it’s vital this approach continues if we’re to empower the next generation of businesses.”
There are also concerns about the chancellor’s own approach, especially in regards to her fiscal rules to ensure that public sector financial liabilities fall as a share of the economy by 2029/2030.
“The current fiscal projections and rules – which the government has chosen to follow over the next three to five years – are built on a foundation of assumptions,” said Stephen Jones, global CIO at Aegon Asset Management.
“These assumptions, while necessary for modelling, create a false sense of certainty, deliver spurious accuracy.”
The fact is, noted Jones, the economic landscape is shaped by variables far beyond the reach of any single budget cycle or set of fiscal rules.
“In truth we are still in the foothills of dealing with the mountainous journey we chose on leaving the EU; in the foothills of looking at the impacts on enhanced AI technology on a service lead economy; and in the foothills of appreciating the life changing revolutions sweeping through medicine,” said Jones.
“By centring the narrative solely on short-term rule compliance, we risk missing the deeper, structural challenges that will define the UK’s future,” he added.
The challenge for Jones is therefore clear.
“While the details of each budget matter, it is commitment and delivery to long-term thinking that will ultimately determine the UK’s success,” he said.
“By assessing the conversation beyond the immediate and the incremental, we can help shape a narrative – and a future – that is resilient, inclusive, and sustainable,” added Jones. “We must remember this as we assess the impact of the hour or so of speech making we get on Wednesday.”
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