UK Autumn Budget 2025 – Economic Forecast

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 businesses, 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

Tax Changes

• Increase in income tax & CGT may reduce disposable income, impacting discretionary spending on dining out. So implement value-driven promotions and meal bundles to maintain affordability and customer loyalty.
• Introduction of a seller-based property tax could affect commercial property costs. So negotiate long-term leases now to lock in favourable terms before reforms take effect.

Consumer Spending & Inflation

Deflationary budgets and slower GDP growth will lead to cautious consumer behaviour, requiring optimized menu pricing, limited-time offers to attract price-sensitive customers, and enhanced digital ordering and delivery channels to capture convenience-driven demand.

Workforce & Employment Law

• Increased compliance and cost implications from Day-One Rights and Sick Pay will require updating contracts and payroll systems and training managers on new dismissal protocols.
• Zero-Hours Reform introducing guaranteed hours and compensation for cancellations will require auditing scheduling practices and implementing fair shift allocation.
• Family-Friendly Policies and Equality Duties will demand preparing for gender pay gap and menopause action plans and strengthening harassment prevention training.
• Industrial Relations will require enhancing employee engagement and dispute resolution strategies to mitigate strike risks.

Operational Costs & Compliance

National Insurance and Tribunal changes will increase employer obligations, requiring investment in HR compliance tools and workforce planning to manage costs effectively.

Opportunities in Innovation

Government support for tech adoption through R&D incentives and a digital focus will drive accelerated investment in self-service kiosks, app-based loyalty programs, and AI-driven inventory management.

Risk Mitigation

Economic uncertainty, with potential interest rate cuts that may ease borrowing costs but at uncertain timing, will require maintaining a conservative cash flow strategy and exploring franchise financing options early.