Chancellor Rachel Reeves’ Autumn Budget delivered a blend of ambition and restraint that has left the UK’s IoT and wider technology sectors weighing both its immediate implications and its long-term direction.
While the government reaffirmed its desire to position the UK as a hub for digital innovation, experts said that the Budget’s constrained fiscal backdrop and notable tax rises have tempered industry enthusiasm.
For the UK’s AI and deep-tech communities, several announcements were cautiously welcomed.
Nik Kairinos, CEO and Founder of Fountech AI, highlighted that “recent tech-focused measures at least indicate that the Chancellor is beginning to make the right sounds about supporting the UK’s tech industry”.
He pointed to the AI Growth Lab, the Sovereign AI Unit, guaranteed payments for AI hardware startups, and the preservation of R&D tax credits, saying they “offer a glimmer of optimism” and collectively demonstrate intent to support a sector that could contribute up to £400bn to the economy by 2030.
However, he warned that “sounding supportive and being supportive are not the same”, adding that private UK AI investment still lags the US by a vast margin. The next step, he argues, must be to “create conditions that not only support innovation today but also build sustained investor confidence”.
From a legal and regulatory standpoint, James Clark, Partner at Spencer West, noted that the Prime Minister’s ambition for the UK to be “the best state partner for tech entrepreneurs anywhere in the world” was only partly reflected in the Budget.
Clark pointed to positives including “the establishment of four AI Growth Zones”, funding for a modern public compute ecosystem and “an AI for Science Strategy to boost researcher productivity”. However, he also stressed that the UK is competing with far larger markets investing at much greater scale, and that changes such as increased dividend taxation and reduced CGT relief “need to be seen in the context of the wider impact on technology businesses, including start-ups”.
The reaction from financial markets was sharper. Nigel Green, CEO of deVere Group, called the Budget “a masterclass in disincentivising saving and investing”, warning that rising taxes on savings, rental income and dividends would inevitably cause investors to “reconsider how and where they invest”.
He argued that penalising income-producing investments would weaken the appeal of UK equities, noting that “you end up penalising patient capital and rewarding cash withdrawal”.
Manufacturers, who play a central role in delivering IoT solutions at scale, also offered a split response. Stephen Phipson, CEO of Make UK, described the Budget as “two steps forward one step back”, welcoming expanded capital allowances, greater apprenticeship funding and renewed support for regional infrastructure. However, he warned that higher employment costs and EV-related tax changes mean that “manufacturers are again facing greater barriers to successful recruitment and retention of skilled staff”.
Infrastructure commitments were better received by transport-technology and smart-mobility organisations. Blake Richmond, CEO of Resonate Group, welcomed continued investment in major rail programmes and said that “freezing rail fares keeps train travel affordable”, adding that further investment in data and AI “creates more opportunities to develop AI to optimise these flows across an increasingly connected transport system”.
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