The OBR’s 2025 Outlook Is Bleak for Small Business Owners — And Accountants Must Rethink How They Support Clients

3 Dec

The Office for Budget Responsibility’s Economic & Fiscal Outlook (November 2025) sends a very clear message:

The next five years will be some of the most challenging small business owners have ever faced.

Slower growth, high inflation, rising taxes, persistent wage pressure, high borrowing costs, and falling business investment all collide to create a landscape where survival, let alone growth, becomes tougher.

But this moment also shines a light on the unique and powerful role accountants can play.

Accountants are the best-placed advisers to help SMEs navigate what’s coming, but only if they really know their clients.

This blog unpacks the OBR’s key forecasts affecting small businesses, what they mean in real terms, and why the future of advisory lies in understanding the person behind the business as much as the numbers on the page.

What the OBR Says and Why It’s a Warning for SME Owners

The OBR’s report paints a consistent picture of economic headwinds that will hit small business owners hardest.

1. Slower Growth, Weaker Demand

The OBR now expects real GDP growth to slow to an average of 1.5%, down from 1.8% forecast earlier this year. This downgrade is driven by a sharp fall in productivity assumptions, now just 1% over the medium term.

For small businesses: this means softer customer demand, slow sales growth and tighter cashflow.

2. Inflation Stays Higher for Longer

CPI inflation isn’t expected to return to the Bank of England’s 2% target until 2027.
In the near term it rises to 3.5% in 2025 and 2.5% in 2026, due to stronger wage pressures and domestically generated inflation.

For small businesses: input costs remain elevated, price rises remain difficult, and profitability stays under strain.

3. Wage Pressure Remains High

Nominal earnings growth remains stronger than expected with nearly 5% into 2025.

For employers: higher wage bills in a labour market already stretched by skill shortages and NI changes.

4. Rising Tax Burden: A Record High for the UK

By 2030–31, taxes will reach an all-time high of 38% of GDP.
This includes:

Frozen personal tax thresholds
Higher dividend, savings and property income tax
Reduced capital allowances
A new mileage charge for EVs
Additional NIC changes
Continued fuel duty freezes that don’t benefit EV drivers
For business owners: higher personal tax, higher extraction tax, and tighter business cash.

5. High Interest Rates Are the New Normal

The UK now has some of the highest borrowing costs in the developed world, second only to Iceland.

For SMEs: loans, overdrafts, asset finance and investment will remain expensive for the foreseeable future.

6. Weak Business Investment Outlook

Investment is expected to remain subdued due to lower profits, higher interest rates and weak business sentiment.

For growth-minded SMEs: access to capital and confidence to invest, both become harder.

What This Means for Accountants and Their SME Clients

The outlook matters deeply because small businesses, unlike large corporates, don’t have buffers. They don’t have treasury teams, strategy departments or capital reserves.

What they have is you, their accountant.

But here’s the uncomfortable truth:

You can't guide your clients through this environment if you don’t really know your clients.

Most accountancy work is built around historical numbers, compliance cycles, and business-focused reporting.

But the OBR’s forecasts reveal structural pressures that will affect:

the business
the owner
the household
the family finances
the long-term personal plans
the balance between drawings, dividends, tax and lifestyle

An SME’s future cannot be assessed through a set of accounts alone.

To help clients survive what’s coming, accountants must understand:

the goals of the business owner
their personal financial position
their risk appetite
their family situation
their personal income needs
their concerns, motivations and stresses
their long-term plan for the business and themselves

This is what it means to really know your clients.

When you do, you can:

Model both personal and business outcomes
Optimise extraction strategies when tax thresholds stay frozen
Create cashflow plans that consider life outside the business
Stress-test the household as well as the company
Spot risks long before they become crises
Give proactive advice that connects two sides of the same story

Without this deeper insight, advice becomes generic — and in this economic climate, generic advice won’t save a struggling SME.

The Accountants Who Win in This New Reality

The OBR’s outlook is not just a warning about the economy.
It’s a wake-up call for the profession.

The accountants who thrive and whose clients thrive, will be those who:

Build richer relationships

Capture personal data alongside business data

Understand the owner’s story, not just the company’s numbers

Identify personal vulnerabilities that influence business decisions

✔️ See the personal balance sheet and the business balance sheet together

✔️ Provide integrated advice that connects life and work

This is advisory the way SMEs actually need it. This is how accountants become indispensable rather than interchangeable.

How All In Place Helps Accountants Really Know Their Clients

At All In Place, we exist for one purpose:

To help accountants get closer to their clients.

We give you a single, powerful place to:

Capture the personal story behind the business owner
Build a clear picture of their personal balance sheet
Align the business and personal financial trajectories
Understand risk, personality and motivation
Store personal and behavioural insights that inform advisory
See the whole client, not just the company
Deepen relationships and deliver higher-value advice

In the coming years, SMEs won’t just need technical accountants, they’ll need trusted advisers who know them better than anyone else.

The question for the profession is this:

Do you really know your clients today?

If not, now is the time to change that. And we can help you do it.

Because in a landscape as challenging as the one the OBR describes, the only accountants who will deliver transformative value are the ones who truly understand the person behind the business.

Adam Clarke