UK Autumn Budget 2025 – Economic Outlook

The Autumn Budget 2025 signals a period of fiscal tightening as the government addresses a significant deficit and commits to reducing debt as a share of GDP by 2029–30. Key measures include potential increases in income tax rates, reforms to inheritance and capital gains tax, and adjustments to ISA and pension allowances. Property taxation may shift toward a seller-based model, and gambling duties are expected to rise substantially.

For businesses, the budget emphasizes digital innovation and R&D incentives, while SMEs may see changes in VAT thresholds and compliance requirements. Economically, the budget is expected to be deflationary, supporting inflation reduction from 3.8% to around 2% by late 2026, paving the way for interest rate cuts. However, GDP growth may slow slightly due to reduced household spending power.

Additionally, the Employment Rights Bill will transform the labour market, introducing day-one rights for unfair dismissal and sick pay, enhanced family leave protections, restrictions on zero-hours contracts, and new compliance obligations around equality and harassment. These changes will increase HR complexity but align with McDonald’s values of Family, Inclusion, and Integrity.

For McDonald’s franchisees, understanding these trends is critical. Tax reforms and consumer behaviour shifts will influence pricing strategies, workforce planning, and long-term investment decisions. Demonstrating adaptability and proactive planning will be essential to thrive in this evolving economic landscape.

Impact on Food & Beverages Franchise Businesses

1. Tax Changes

• Income Tax & CGT Increases: Higher personal taxes may reduce disposable income, impacting discretionary spending on dining out.
  • Action: Implement value-driven promotions and meal bundles to maintain affordability and customer loyalty.
• Property Tax Reform: Seller-based tax could affect commercial property costs.
  • Action: Negotiate long-term leases now to lock in favourable terms before reforms take effect.

2. Consumer Spending & Inflation

• Deflationary Budget + Slower GDP Growth: Expect cautious consumer behaviour.
  • Action: Optimize menu pricing and introduce limited-time offers to attract price-sensitive customers.
  • Action: Enhance digital ordering and delivery channels to capture convenience-driven demand.

3. Workforce & Employment Law

• Day-One Rights & Sick Pay: Increased compliance and cost implications.
  • Action: Update contracts and payroll systems; train managers on new dismissal protocols.
• Zero-Hours Reform: Guaranteed hours and compensation for cancellations.
  • Action: Audit scheduling practices; implement fair shift allocation.
• Family-Friendly Policies & Equality Duties:
  • Action: Prepare gender pay gap and menopause action plans; strengthen harassment prevention training.
• Industrial Relations:
  • Action: Enhance employee engagement and dispute resolution strategies to mitigate strike risks.

4. Operational Costs & Compliance

• National Insurance & Tribunal Changes: Higher employer obligations.
  • Action: Invest in HR compliance tools and workforce planning to manage costs effectively.

5. Opportunities in Innovation

• R&D Incentives & Digital Focus: Government support for tech adoption.
  • Action: Accelerate further investment in self-service kiosks, app-based loyalty programs, and AI-driven inventory management.

6. Risk Mitigation

• Economic Uncertainty: Interest rate cuts may ease borrowing costs but timing is uncertain.
  • Action: Maintain a conservative cash flow strategy and explore franchise financing options early.