Budget 2026: Talent and technology must go hand in hand to drive UK growth

Today, the UK Government set out its Autumn Budget plans to stimulate productivity, court new investment, and lower operating overheads for British enterprise. The leadership balancing act is to drive growth through technology and talent, writes Angus Milledge, SAP Concur Head of New Business Sales.

British businesses face pressures ranging from climbing inflation rates to more expensive capital and energy. These “global economic storms,” as Chancellor John Healey termed them in his 2026 Budget speech, leave little margin for error.

Thankfully, the Government intends to give business leaders some much-needed “breathing space” through newly announced tax and spending plans.

To maintain the UK’s standing as a global hub for innovation and investment, policymakers must create conditions for long-term economic growth – and encourage existing talent to stay rooted and ambitious on home turf.  

Laying the foundations for long-term growth

I was pleased to hear of new initiatives to lower operational overheads, such as lifting the Small Business Rate Relief threshold from £12,000 to £18,000. This will exempt some 70,000 retail, leisure and hospitality businesses from paying business rates.

The Government is also introducing a 10% Capital Gains Tax “Founder’s Relief” to promote the UK as an attractive destination to start a new business.

These incentives offer business leaders some welcome respite. But to succeed, industry must be realistic about where to place its bets. The Government has an opportunity to assess the highest-performing sectors and make specific provisions to set them up for further success.

These industries include technology, financial services, and professional services, alongside others that contribute significantly to UK growth and innovation. Startups in these verticals often operate globally from day one; as they consider expansion, domestic policy must give them compelling reasons to keep operations in the UK.

Measures that improve access to talent and support labour market flexibility will help to sustain interest in scaling up at home. Continued support for high-growth sectors will be crucial in making the UK the go-to destination for ambitious businesses to start, invest, and grow.

Navigating the talent vs. technology tipping point

Many businesses are approaching a tipping point. Even with broad-based tax hikes off the table, rising operating costs and minimum and national living wage increases are tightening budgets. At the same time, technology projects are demanding greater investment, leaving a difficult choice over where to allocate resources.

Do leaders keep hiring and upskilling junior talent? Or do they invest more in AI to boost productivity? 

On a human level, reducing investment in younger generations would raise important concerns about future workforce skills and opportunities. It would deny opportunities to younger people and create long-term workforce skills gaps without a natural talent pipeline progressing through the organisation.

On a business level, it’s also a missed opportunity. Some of the younger people I work with are the most skilled and innovative AI users I know. They are digital natives, and we need them on board to shape how we use technology in the future. 

There’s a way forward that avoids both outcomes without neglecting AI’s transformative potential.

The strongest use case for AI is automating repetitive, manual tasks – the kind of routine administration that graduates aren’t motivated by. Research by the Higher Education Statistics Agency shows that meaningful work – roles that draw on acquired skills and align with future plans – is the strongest predictor of workplace satisfaction. Younger people want fulfilling, value-adding roles.

Businesses should consider using automation to streamline workflows while handing strategic work over to up-and-coming talent. And policy must incentivise businesses to invest in talent and technology at the same time. 

Improving technology ROI

The Government is expanding support for the Sovereign AI Unit, channelling £140 million towards British AI companies. But while the appetite for AI is strong, high operational costs and news of the Budget may spur many leaders to scrutinise their technology investments. 

Organisations often struggle to determine the best way to implement AI and measure return on investment – and yet spending continues to grow. According to SAP research, UK businesses are spending an average of £20.6 million on AI this year, an increase of 27% over 2025.

In a bid to make their investments watertight, the leaders I speak to are doubling down on the highest-value AI use cases within the organisation. Some of the most compelling AI investments target everyday bottlenecks, such as manually managing expenses or reimbursement through spreadsheets. Without automation, these workflows may create additional administrative effort and reduce efficiency. 

AI-enabled expense management solutions can provide clearer policy guardrails and greater visibility into corporate spend.  A strong programme can help strengthen financial controls, improve oversight, and equip finance teams to make more informed decisions.

Digitised expense and invoice management is also set to become an increasingly important component of financial compliance and reporting. As announced at Budget 2025, the Government is strengthening compliance and moving towards mandatory electronic VAT invoicing from April 2029. Invoices tracked in a consistent electronic format will help businesses invest in new digital systems and expand expense management automation – a top use case to bolster tech ROI. 

Preparing for 2027 and beyond 

I hope the government’s raft of relief for British enterprise will drive innovation and growth for businesses. Rate cuts and Founder’s Relief are welcome steps in the right direction.

Support for high-growth sectors such as tech, financial services, and professional services will remain important in attracting investment and talent to the UK – and maintaining its status as a go-to destination for businesses to set up, scale, and succeed.

In the best-case scenario, UK inflation falls, interest rates drop, and the cost of capital becomes manageable for businesses. That would provide welcome relief in the tech-talent debate. But practically speaking, policy can only go so far. It’s on leaders to strike a balance between managing costs and accelerating growth. 

Organisations that find the sweet spot where technology supports their growth and empowers their people will be well positioned to compete and grow in the years ahead. 

Find out how SAP Concur can help you automate manual tasks and free your people to focus on growth in 2027.