Chancellor John Healey’s inaugural budget has drawn a mixed, largely skeptical response from retail and hospitality leaders who argue the measures provide minimal relief against a backdrop of mounting operational costs. While the government introduced changes to business rates and sought to cap minimum wage growth for younger employees, industry figures maintain these actions are insufficient to reverse the damage inflicted by two years of previous, high-tax policy. So they will only rise in line with inflation for two years, and clamped down on VAT dodging by online sellers, among other measures intended to help high streets, the chancellor put a lid on increases to business rates. However, some businesses argued Andy Burnham’s chancellor could have gone further. He does not expect to get much benefit from the increase in the threshold at which business rates begin to be paid.
James Nye, managing director of Norfolk-based Anglian Country Inns, compared the situation to a paradox: “It is like letting the tyres down and then handing you a pump.” Nye, overseeing 10 venues across Norfolk and Hertfordshire with 500 seasonal staff, acknowledged the budget took a “couple of steps towards helping” but warned that added labor expenses would continue to burden companies already struggling under an 83% tax burden relative to profit. Nye, who employs 500 people at the height of the season at its 10 venues across Norfolk and Hertfordshire, was among those business owners watching Healey carefully on Wednesday, after two previous Labour budgets under Rachel Reeves had loaded extra costs on to businesses. According to while he, Reeves’s budgets had been “really damaging, this is safe but isn’t going to change anything”. According to “The chancellor’s key narrative was that he wanted to support British businesses doing business with Britain and we applaud and support that,”, Hannah, whose business employs 28 people directly. We pay 83% as a percentage of our profits in tax,” Nye says. Budget 2026: key points at a glance.
The sentiment is echoed by Dean Richmond, owner of the 159-store Pets Corner chain. Founded in 1968, the business now employs 1,200 people, but Richmond believes the chancellor failed to address the core issue: that business costs are rising significantly faster than sales. He dismissed the business rates adjustment as akin to “moving the deckchairs on the Titanic,” arguing that a more significant, bolder shift is required to protect the high street.
While business owners largely applauded the chancellor’s efforts to curb VAT evasion among online sellers, many expressed disappointment that he did not end tax breaks for overseas retailers such as Shein and Temu. When offline retailers all but disappear the world will miss us,” he says.
Richmond noted that his company has been forced to implement drastic internal cuts, including reduced bonuses and a pivot toward hiring older staff because incentives for new starters have diminished. He fears that without more substantial intervention, offline retail faces an existential threat. Such as its mug manufacturer in Stoke, and look abroad, he has been forced to ditch some of them.
Spencer Hannah, co-founder of Herdy in Cumbria, expressed support for the government’s stated goal of bolstering British trade.
However, he lamented that the budget lacked the “seismic difference” required to support small and medium-sized enterprises. “Like everybody else running small and medium-sized enterprises, life has got slowly harder over the last two budgets and some poor choices have been made by the [last] leadership in government.”.
Hannah explained that rising costs for energy, rent, and national insurance have forced him to abandon domestic suppliers in favor of cheaper international alternatives, noting that current rate relief fails to counterbalance the fiscal difficulties of the past two years.
Despite the relief measures, the hospitality sector remains particularly anxious. Nye criticized the decision to raise the legal minimum wage again in April, noting that it effectively wipes out any gains from the business rates changes. The sector also faced disappointment over the absence of a VAT cut or further national insurance relief for young workers.
While Nye expressed hope that the chancellor’s support for household energy bills might stimulate consumer confidence, he voiced deep concern that dining and social outings are increasingly becoming unaffordable luxuries rather than routine conveniences. For many operators, the cumulative tax burden remains the primary obstacle to survival. My biggest fear is that hospitality starts becoming a luxury rather than a convenience.”.
