Budget 2025: Sugar tax expanded but UK tightens belt and growth slims down

The impact of Chancellor Rachel Reeves' 2025 Budget may not be as dramatic as the briefing and leaking which preceded it, Bayes Business School's experts believe.

Sonia Falconieri, Professor of Finance, on lifting stamp duty on IPO shares:

“The Chancellor’s decision to pause stamp duty on shares issued in IPOs for the first three years following listing is recognition that London is struggling to stay competitive, especially in attracting growth-stage listings. However, structural challenges run deep and the decision might not be enough.

“The UK has been relatively slow to respond to intensifying global competition among exchanges. Revisions to the listing criteria, while welcome, have so far fallen short of making the market genuinely more attractive and failed to fundamentally reposition the UK as a destination for dynamic growth companies.

“The domestic investor base – once a pillar of the London market – has all but disappeared. According to the ONS, overseas investors now own 57.7 per cent of UK equities, while UK pension funds and insurers held just 4.2 per cent in 2022, down from 45.7 per cent in 1997.

“The UK has maintained one of the highest stamp duty regimes among European markets. Several peer countries, and the US, don’t impose stamp duties on share transactions at all. That clearly puts the UK at a disadvantage in a globally mobile capital market.

“Today’s decision may boost IPO activity in the near term, but it must be part of a broader set of structural reforms to restore the LSE’s standing as a leading global exchange. In that context, the London Stock Exchange’s recent discussion paper on reforming AIM admission rules is a step in the right direction. By easing admission standards, including allowing dual-class share structures, it recognises that the UK must adapt and evolve if it wants to persuade both domestic and international growth companies to list here.”

Dr Amit Rawal, Lecturer in Management, on a freeze to rail fares:

“The rail fare freeze is a smart move and a win for many. As well as saving consumers hundreds of pounds a year in travel expenditure, companies may now see employees commute into the office more often leading to increased productivity and idea generation.

“How sustainable this freeze is in the long-term, however, remains to be seen.”

Professor Feng Li, Associate Dean for Research & Innovation, on fading growth prospects:

“Even if one accepts the case for higher taxes in the current fiscal context, the obvious question remains: where is the strategy that will generate the productivity, investment and institutional renewal that are desperately needed for credible growth?”

John Forth, Professor of Human Resource Management, on the rapid rise in living wage rates:

“The latest minimum wage rise represents a big test of the whole policy.

“The new rate of £12.71 for over-21s from April 2026 will keep the National Living Wage at the government’s benchmark of two-thirds of UK median earnings, but follows a 77p increase this year.

“Coupled with the recent rise in employer national insurance contributions, it is bound to put pressure on businesses and it wouldn’t surprise me if we start to see some impact on employment given the weakening labour market situation.

“The 85p increase in the rate for 18-20 year olds to £10.85 is particularly bold though. The minimum wage for this group sat at just £8.60 earlier this year, which means the rate for younger workers will have risen by over 25%, and more than £2, between March 2025 and April 2026. Everyone will be watching employment rates in this age group particularly closely over the year ahead.”

Dr. Paulina Roszkowska, Lecturer in Finance, on what the Budget means for fintech:

From a fintech perspective, the latest UK Budget signals a clearer shift toward technology-led growth. Alongside broad tax rises and fiscal tightening, the government introduced targeted measures for the digital economy — including expanded SEIS/VCT investment incentives and a temporary stamp-duty exemption for UK firms going public. These steps show a growing expectation that productivity gains will come not from higher public spending but from better adoption of digital tools, automation and data-driven systems.

"Whether this vision is realistic depends on the UK’s ability to scale these technologies despite a tougher tax environment. The UK remains competitive globally, especially in fintech, but keeping pace with leaders like the US and Singapore and other (also emerging) countries will require stronger long-term digital policy, clearer regulatory direction and sustained investment beyond what this Budget alone provides."

Anirban Mukhopadhyay, Professor of Marketing and Behavioural Science, on the sugary drinks levy:

“The Government's decision to remove the exemption of milk-based sweetened drinks from the soft-drink levy, and reduce the tax threshold of sugar content, are both very welcome indeed.

“This country is stagnating under a rampant obesity epidemic, and research heavily implicates the role of junk food and sugary drinks. Such levies have been shown to work in many places around the world. They help reduce consumption of sugars that we do not need, and which actively harm us.

“Raising taxes on such harmful products will increase funds for the exchequer, lighten the burden on the NHS, and, most importantly, induce consumers to keep their pennies in their pockets and pounds off their waistlines.”

Les Mayhew, Professor of Statistics at Bayes Business School, agreed. 

“My research reveals that life expectancy is 2.3 years below where it would be if pre-2010 trends had continued. This is down to grotesque health inequalities which result in people in the poorest areas dying 11 years earlier than those in the richest. Poor people also typically spend more than 20 years in poor health, double that of those in the richest areas. That has economic and fiscal consequences as many poor people leave the workforce early and join the growing numbers on health and disability-related benefits.

“The extension of the sugary drinks levy is welcome but it must be part of a beefed-up and comprehensive public health strategy.”

Dr Amit Rawal, Lecturer in Management, on NHS investment:

“Investment into the NHS could be a valuable step towards creating the efficiencies it so desperately needs.

“Improvements in technology could help doctors, nurses and other front line staff to treat people more quickly as they would have faster access to patient data, reducing waiting times for procedures.

“Technological investment, however, can only go so far. Further work needs to be done to address other staff shortages, specifically a more sustainable workforce strategy that offers greater incentives to retain staff alongside improved working conditions and training.

“Without resolving staffing issues, the impact of the new technology will be restricted.”