Press Release
Grant Thornton UK: Skills and Productivity response to Autumn Budget 2025
26 Nov 2025
Skills
Ruth Walsh, Head of Talent Solutions at Grant Thornton UK:
Today’s Budget has signalled a commitment to equipping young people across the UK with the tools to support long-term career ambitions, though the scale of impact remains to be determined. The Chancellor confirmed that training costs for apprentices under 25 will be fully funded for SMEs from 2026, and while this increases Government co-investment and removes the remaining 5% contribution currently paid by employers, it still represents a relatively small saving.
This initiative sits within the new Youth Guarantee programme, backed by an additional £820 million over three years, designed to boost employment for young people in the face of the country’s emerging employment skills gaps and the long-term productivity puzzle. Commitments were also made to modernise colleges and expand training opportunities for 16 to 18-year-olds, ultimately aiming to support young people into work, alongside high-quality training and apprenticeship opportunities, though much of the detail is still to come.
Alongside these initiatives, questions remain around the effect of new funding models on university finances, particularly with the introduction of a levy on international students from August 2028 – proposed today as a flat fee of £925 per student per year rather than the percentage-based approach previously speculated.
Employers will be watching closely for clarity on how promised flexibility in apprenticeships will work in practice, as well as the broader implications for workforce planning.
Productivity
Carolyn Hicks, Business Consulting Partner at Grant Thornton UK:
The Chancellor’s Budget sets out a clear fiscal roadmap, but for UK businesses, productivity remains the defining challenge. With the Office for Budget Responsibility now reducing expectations for productivity growth by 0.3 percentage points, budgeting measures such as increases to the national minimum wage and widened eligibility for enterprise incentives still fall short of the bold action needed to close the UK’s persistent productivity gap.
Mid-market firms are broadly perceived as the engine room of the country – yet skills shortages and rising employment costs threaten to stall this and hamper these organisations that form backbone of our economy. Without targeted investment in technology adoption, infrastructure delivery and workforce upskilling, the UK risks entrenching low growth and widening the competitiveness divide. Businesses need confidence to invest, not just clarity on tax rates.
Grant Thornton believes the answer lies in partnership: government policy must catalyse private sector ambition. Extending incentives for digital transformation, accelerating planning for infrastructure projects, and embedding advanced skills programmes will unlock latent potential across sectors. Our Business Outlook Tracker shows mid-market leaders remain optimistic about boosting productivity – but optimism alone won’t move the dial. Now is the moment for decisive action that aligns fiscal stability with growth-oriented measures, ensuring UK businesses have the tools to innovate, scale and thrive in a global marketplace.
