One of the more challenging factors facing the Chancellor this autumn will be balancing political ambition against economic reality.
Although inflation is no longer at the levels experienced during the cost-of-living crisis, the effects of several years of higher prices continue to work their way through the economy. Households remain sensitive to rising costs, while businesses continue to face pressure from wages, energy costs, financing costs and regulatory change. This creates a difficult backdrop for any government seeking to increase spending while maintaining confidence in the public finances.
As Prime Minister, Andy Burnham has made tackling living standards a central feature of his messaging. His nationwide listening tour and repeated references to giving people “breathing space” suggest his government understands that many families do not yet feel the benefits of improving economic indicators.
However, inflation trends are only one side of the story.
Is there a disconnect between sentiment and performance?
In a recent review of business confidence across the East of England PEM highlighted a growing disconnect between economic sentiment and business performance. While confidence levels remain significantly below historical norms, many businesses continue to adapt, invest and pursue growth opportunities despite persistent uncertainty.
This resilience is particularly important when considering what the Autumn Budget may contain. Businesses entered 2026 facing higher employment costs, inflationary pressures and uncertainty around government policy. Although trading performance has generally held up better than many expected, confidence remains subdued and boards continue to take a cautious approach to investment decisions.
Will government ambition be balanced by pragmatism?
From a Budget perspective, this presents a delicate balancing act. Additional taxation or regulatory burdens may prove difficult for businesses to absorb at a time when confidence remains fragile. Equally, the government will need to find ways of funding its ambitions around devolution, infrastructure and social care without undermining growth.
For this reason, we will be watching closely for policies that encourage private sector investment alongside public sector reform. Businesses are unlikely to oppose long-term investment in economic growth or public services, but they will want assurance that competitiveness, productivity and business confidence remain central considerations in the government’s plans.
Perhaps the most important message from the latest confidence data is that businesses have not stopped investing in the future. Despite economic and geopolitical uncertainty, organisations across the East of England continue to demonstrate resilience and adaptability. The Autumn Budget presents an opportunity for government to build upon that resilience rather than test it further.
Prepare for the Autumn Budget with confidence
The policy announcements made this autumn could have significant implications for businesses across the East of England. Whether you’re reviewing investment plans, considering future growth opportunities or assessing the impact of potential tax changes, PEM’s specialists can help you understand what the changes may mean for your business and identify opportunities to support future growth.
We will also be hosting our annual Autumn Budget seminar for clients and members of our referrer network, where our experts will provide analysis of the Chancellor’s announcements, key tax and business updates, and practical guidance on what to do next. Keep an eye out for further details and registration information.
