The UK’s first ever female Chancellor of the Exchequer, Rachel Reeves, delivered the first budget of the new Labour Government to a crowded House of Commons, and it’s already been dubbed the biggest ‘tax bomb’ ever.
Reeves told Parliament that her budget would raise £40 billion in taxes, and that she was taking steps to protect the nation’s working people.
But the Chancellor also came down hard on businesses with a £25bn hit from a planned increase in Employers’ National Insurance contributions.
Here’s what media industry leaders have been saying about the budget…
Paul Bainsfair, Director General, IPA
“At PMQs immediately before the Budget, the Prime Minister reiterated that his Government’s number one mission is growth.
“And the Chancellor opened her announcement by stating that the only way to drive growth and restore economic stability was to invest.
“Agencies are great growth engines and advertising spend has a multiplier effect on GDP. But the economics of agencies are dominated by payroll.
“The change to Employer National Insurance contributions represents a very significant increase in the cost base of agencies and threatens their ability to facilitate the growth the Government says it is prioritising.
“More broadly, agencies stand or fall on their talent. Moreover, shifts in employee rights, will significantly affect how agencies recruit, retain, and nurture the creative minds that are essential to our sector’s success.
“The Chancellor also announced increases in CGT and the tax paid on carried interest. We are concerned that this may lead to a reduction in appetite for investment in agency businesses, whether by individuals or by financial sponsors.
“We just have to hope that this short-term pain will, as the Chancellor suggested, ultimately unlock vital long-term growth for the UK economy.”
Julia Linehan, Founder and CEO, The Digital Voice
As a business owner who works with so many companies, there was a definite nervousness and dread for the budget – and the fall out it will have.
“Right now, our industry is expecting a 12.7% growth in digital in 2025 but that doesn’t mean that it will be easy and businesses need support, not endless taxation.
“As a company founder, my concern for me and our client partners is that there will be pressure to limit investment in tech and innovation and yet this is what is needed to help boost the market and keep growing and innovating.”
Jason Warner, Director, UK and EMEA, SBS
“UK companies will be disappointed – but not surprised – by the rate increase on employer national insurance.
“Alongside the lowered threshold for payment of this tax, there is likely to be increased financial pressure for many businesses, leading to knock-on consequences such as pausing hiring, scaling back pay increases and reviewing employee benefits.
“In a challenging landscape, difficult decisions must be made.
“Supporting the smaller players – like independent agencies in the advertising industry – has never been so relevant.
“However, while some small business support has been offered, this is unlikely to make much difference to established businesses who may have to make some difficult decisions of their own, especially as with many bigger companies still tackling a COVID-19 hangover of hefty office overheads with hybrid workforces.
“Whatever their size, strong businesses with a forward-looking mindset will navigate these challenges and push forward.
“Despite the challenges that this Budget has presented, the silver lining is that there is still a commitment to invest and restore stability which means the UK remains a great place for foreign investment.”
Peter Proud, Founder and CEO, Forrit
“The tech industry faces unique cost pressures, as nearly all expenses go toward salaries for highly skilled, expensive talent.
“The 1.2% increase in National Insurance and lowering of the industry entry point are another double hit significantly increasing our costs.
“While maintaining entrepreneurial relief is net neutral for now, it doesn’t fully compensate for the risks taken by those entering startups.
“Without the potential for a major exit, investment returns are taken out through smaller dividends, which can also be discouraging for entrants.
“Policies that penalise retirement savings—such as including pension as part of the estate for inheritance tax purposes—are short-sighted, they discourage individuals from funding their own retirement and ultimately drive unintended behaviour, shifting the burden back onto the state.”
Rob Conibear, Managing Director, JvM London
“How can industry leaders push past budget-induced short-termism? The long and the short of it is pressure on margins is placing creativity on pause.
“We asked industry leaders how smart brands can better play the long game?
“Answer: Not all short-termism is budget induced.
“Marketers looking for fast recognition have been favouring measurable short-term data to avoid long-term brand investment for years now.
“Especially if they only plan to be in the role for 18 months. But the situation is certainly exacerbated by the tightening of budgets.
Tight times call for new strategies. Smart brands will re-think how they use the marketing mix to marry short-term and long-term ambitions.
“Now that we are living in a world of more easily connected experiences, it opens up opportunities for brands to develop different ecosystems. For example, a sportswear brand can support and activate running clubs to gain credibility and recommendation.
“But they can also use those activations to create content that can span social channels and paid advertising. They can be the channels through which to show new products in use for the first time and create anticipation for their launch.
“Smart brands will look at these ecosystems in a more cohesive and strategic way, re-thinking communities, activation and content.
“We’re building that into our thinking as standard.”
James Kirkham, CEO and founder, ICONIC
“For businesses in media, advertising, and creative technology, Reeves’s improvements to tax relief in the sector—especially for VFX and content creation—are welcome.
“The £25 million investment in redeveloping Crown Works Studios in Sunderland is a model for regional investments developing creative hubs beyond London, where local talent can thrive.
“It’s an opportunity for the creative industries to become a global powerhouse.”
Kyle Brogan, Joint Managing Director, Fusion Unlimited
“I don’t think it’s as bad as we initially thought it might be. The rhetoric created by today’s Budget may enhance consumer confidence – and that ultimately would be good for business.
“But conversely, the taxes and resulting impact on larger businesses might have a knock-on effect.
“For our industry, that might mean marketing budgets are pulled – history has shown it’s often the first to go. But only time will tell.
“As an aside, the rise of the minimum wage is great to see, but as a Real Living Wage Employer it’s the least we should expect.
“We need to work hard as an industry to ensure fair access and opportunities for all.”