Should Business Owners Be Worried About Rachel Reeves’ First Budget?

As the leaves turn golden in October, businesses across the country are bracing for a political event that could redefine their futures: the unveiling of Rachel Reeves’ first budget as Chancellor of the Exchequer.

A figure who rose through the Labour Party ranks on her reputation as a sharp-witted figure, Reeves has risen to one of the most important posts in government. But should British business leaders be trembling in their boardrooms, wondering what Reeves has up her sleeve?

Rachel Reeves, the first female chancellor since the office was created in 1316 (yes, she’s even older than Mick Jagger), has a charm that suggests she’s not in the job for a celebratory tea party. No, Reeves means business – literally. Her background as a Bank of England economist and tenure as chair of the Business, Energy and Industrial Strategy Committee imply that she knows how to handle a spreadsheet. But here’s the rub: it’s not her competence that’s in question; it’s her ideology.

For years, business owners have grown accustomed to the Conservative playbook of tax cuts and deregulation—a steady stream of policies designed to keep the wheels of capitalism running. But Reeves has signaled a departure from this easygoing approach, championing what she calls “responsible capitalism.” The phrase itself sounds almost quaint, as if it promises to transform the reckless, wild teenager that British capitalism represents into a sensible, well-mannered adult. But is that really what businesses need?

Let’s just say one thing: Business thrives on certainty. While Reeves has pledged to maintain a competitive tax system, she has also made clear that she intends to crack down on tax evasion, increase public investment, and push for a more equitable distribution of wealth. On paper, these goals sound laudable – who doesn’t want a fairer society? But in practice, they could cause problems for those accustomed to the status quo.

Consider, for example, Reeves’ plan to close loopholes that allow multinationals to shift profits abroad and avoid paying their fair share of taxes. It’s a noble endeavor, but it could have unintended consequences. Companies that have relied on these mechanisms to maximize profits could find themselves in a tighter financial bind, forced to cut costs, or worse, consider moving to more tax-friendly jurisdictions. The fear is that Reeves’s model of responsible capitalism could lead to capital flight, as companies seek refuge in countries where the taxman’s reach remains unchecked.

There’s also the issue of public investment. Reeves has pledged to increase spending on infrastructure, green energy, and technology—areas that clearly need a cash injection. But the looming question is: Who will foot the bill? If Reeves chooses to finance these projects through borrowing, she risks increasing the national debt, which could lead to higher interest rates and inflation. On the other hand, if she decides to raise taxes—particularly on high-income earners and corporations—she could stifle the entrepreneurship and innovation she seeks to foster.

Let’s remember her commitment to workers’ rights. Reeves has promised to strengthen labor laws, boost job security, and ensure that the minimum wage keeps pace with the cost of living. Again, these are laudable goals, but they come at a high price for employers. Increased regulation and higher wage costs could force some companies, especially small and medium-sized ones, to make difficult choices—either absorb the costs and suffer the blow to their profit margins or pass them on to consumers in the form of higher prices. Neither option is particularly appealing in an economy already suffering from a cost-of-living crisis.

But perhaps the most important concern for business owners is the broader economic environment in which this Budget will be delivered. The UK economy is still reeling from the effects of Brexit, the pandemic and the war in Ukraine. Inflation remains stubbornly high, and growth has been slow at best. The Reeves Budget will need to walk a tightrope – stimulating growth without overheating the economy, and supporting the most vulnerable without deterring investment.

But for all the skepticism, there is a strong case to be made that Rachel Reeves’ approach may be exactly what the UK economy needs. The past decade has seen a growing divide between rich and poor, with wealth concentrated in the hands of the few while the many struggle to make ends meet. By addressing these inequalities and investing in the future, Reeves could lay the foundation for a more sustainable and resilient economy – one in which businesses can thrive over the long term, rather than simply survive from quarter to quarter.

But should UK business owners be worried about what Rachel Reeves has up her sleeve? The answer is: it depends. If they are willing to adapt, innovate and embrace a more responsible form of capitalism, they may find that Reeves’s budget presents new opportunities rather than threats. But for those accustomed to the old way of doing things, this new chapter in UK economic policy may be a wake-up call. As the saying goes, change is the only constant – and in business, those who fail to adapt often get left behind.

Ultimately, whether Reeves’s budget is a blessing or a curse will depend not just on the numbers she presents in October, but on the business community’s response. Will they see it as a harbinger of doom or a catalyst for positive change? Only time will tell. But one thing is certain: This fall, all eyes will be on the chancellor — and what she pulls out of her iconic hat.