Well – this was the most unique run up to a budget that I have ever even heard of. I was planning on focussing solely on the content of the budget – but actually more (in) activity and impact was generated by the run up to it!

The high levels of speculation – almost entirely driven by leak after leak, to the extent that numerous commentators have accused HMG of a strategy of running prospective policies up the flag-pole to see what might be acceptable (hardly an inspiring way to formulate policy!) – have been enormously concerning for all sectors of the economy.

In direct terms – this has caused a significant slowdown (in our specific view, at least) in activity in both the investment and lettings markets – prospective deals across our desks are down markedly from the usual levels, and the letting market seems reticent to move ahead of certainty being delivered. Transaction speed remains painfully slow. Why move now, with such little certainty, when you can wait?

Business is a remarkably resilient beast – but uncertainty is the real killer. Better economic commentators than I, will I am sure, analyse the economic damage of this pre-Budget uncertainty – regardless of the impact of the eventual budget itself.

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What, however, are the key effects of the budget itself on Commercial Real Estate?

Business Rates

Some positive sounding news for retail, hospitality & leisure with lower business rates via the proposed multiplier reduction (5p below the standard multiplier), although this has to be taken in the context of the April 2026 revaluations (clearly an increase, although these are accompanied by a drop in multipliers anyway) and the tapering of previous reliefs – we don’t yet know how the scene will look compared to today.

It was also pleasing to note that Small Business Rates Relief will be extended, for those businesses expanding into a second property.

Of how much practical value this will be to RHL operators is yet to be seen, in the context of the broader economic environment they are operating in at the moment – but it is (superficially) not a ‘bad’ thing in isolation. Whether it is enough of a ‘good’ thing to provide a much needed fillip to those businesses already significantly struggling is yet to be seen.

Finally, I would advise the Chancellor to be slightly more clear on the difference between ‘value’ and ‘rateable value’ as upon hearing that ‘High Value properties [are those], valued at £500k+’ [and are thus seeing an increase in multiplier in relative terms], I almost had a heart attack.

Capital Allowances

A change in the writing down allowance from 18% to 14%.

On the flip side – the introduction of a new 40% First Year Allowance for main rate expenditure.

These seem like fairly technical changes – as the AIA now seems to increasingly cover investment, although the new FYA does appear to include assets for lease, previously excluded.

Perhaps the biggest disappointment here is that such a notoriously complex subject as Capital Allowances remains just as Byzantine as ever. If ever a topic needed stream-lining and simplifying, it was Capital Allowances.

Planning

Really more seems to be said about house-building and major infrastructure in terms of planning, rather than a more general review of planning policy, which would encompass broader CRE also. There seems to be a slightly concerning (and yet now sadly familar) undertone that rather than seeking root-and-branch reform of planning as an overall discipline – it is just a case of more exceptions being raised & fast-tracks being allowed for headline-grabbing schemes – why not just reform wholesale, rather than carve out?

However – the plan to invest £48m to boost capacity in the planning system is no bad thing – and hopefully benefits will accrue to CRE at the smaller end, as well as to large scale housing & infrastructure projects.

Regional Growth Funding

Head-line positive, but one always worries when Government (National or Local) provides direct & nominally targeted funding into an economy like this – are they best positioned to know where & how to invest? I would argue that it is better to cut taxes to allow for organic investment, rather than raise them and then re-invest via the State – it leads to fiscal friction and less efficient, accountable and accurate deployment of funds.

Sadly we are all too well aware of the multiple instances of wasted money within these projects – merry-go-rounds of discussion, proposals, consultancy papers, etc. with little to show for it at the end in the high-street.

Impact on Growth, Inflation & Interest Rates

However – as with all industries, no-one is an island unto themself – and we, as prudent stewards of our portfolio, and partners with our tenants, have to consider also the effects on other industries, and the economy more broadly.

The OBR’s forecasts for growth, whilst up in the short term continue to look anaemic. Nothing in the budget looked likely to make structural changes to the rate of inflation, and I cannot see anything that is likely to make a huge amount of difference to the likely path to be taken by the MPC in rate meetings.

Lower levels of economic and commercial confidence amongst our tenants and their customers will naturally be of concern – and little in this budget looks to be providing incentives to business to expand, invest and employ.

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Ultimately, this is a disappointingly light-weight budget for CRE – with little in terms of meaningful alterations or improvements made to the direct landscape. ‘Tweaks’ are no substitute for root-and-branch reform, where it is needed, no matter how complicated such might need to be.

This isn’t an overall analysis of the budget – but it was a fairly ‘meh’ one, and overly Statist in tone, for all that it contained some positive elements. Government getting ‘out of the way’, to quote the Chancellor, is exactly what it needs to do when it comes to business, contrary to her assertions. Growth is built ‘patiently & stubbornly’ as she noted – but by the Private Sector, not the Government, which should only ever be an enabler, not an arbiter, of commercial activity.

In conclusion – as perhaps any business person or investor already knew full well – it is uncertainty that is the real killer – we can but hope that even pessimistic certainty is preferable to uncertainty. The impact of the budget itself? We shall see – but it certainly doesn’t ease the burden on business in any meaningful way – and this can’t be a good thing for investment more broadly.