After the Budget: “not as bad as expected” — but still lacking a strategic reset

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Summary

The immediate reaction to the Autumn Budget across the auto, asset and equipment finance sectors can be summed up in a single phrase used repeatedly during Asset Finance Connect’s post-Budget webcast: “not as bad as expected.”

Despite months of leaks, political tension and market speculation, the Chancellor delivered a package that avoided major shocks. Yet it offered little of the long-term clarity or pro-growth strategy that lenders, funders and SMEs are crying out for.

Throughout the discussion, the panel – David Betteley, John Phillipou, Simon Goldie and Jonathan Smart – circled back to the same sentiment: mixed relief, limited optimism, and, as they each concluded, approximately “40% happy.”

Below is a full analysis of the conversation and what the new policy landscape means for our industry.

“Hard to find the spark”: SME sentiment and short-term policymaking

Moderator David Betteley, AFC’s head of content, set the context: the Budget shapes investment incentives, fleet renewal decisions, SME planning, EV adoption and the competitiveness of UK lending markets. Yet he felt it had “failed to deliver in a number of crucial areas”, particularly in offering stability and confidence for long-term planning.

Asked for his SME customers’ reaction, John Phillipou, chair of the Finance & Leasing Association (FLA) and managing director of SME lending at Paragon Bank, said the biggest problem remains uncertainty:

“Nothing’s jumped out to me as a spark to drive investment or change… The feeling is that established businesses who’ve been here for a long time and want to grow feel a bit lost in the ether.”

Phillipou warned that the stop-start rhythm of Spring Statements and Autumn Budgets – each preceded by months of speculation – undermines decision-making:

“We can’t go from six months to six months with speculation before every fiscal event. It’s not good for business… We need long-term policies and a vision.”

Capital allowances and leasing: a half-way house

Simon Goldie, the FLA’s director of business finance & advocacy, set out what the association had asked government for:

• the inclusion of leasing in full expensing
• changes to benefit-in-kind on EVs to stimulate the used market
• and greater clarity on the taxation of EV charging.

He described the outcome as “40% happy”.

The Government has reiterated its commitment to include leasing in full expensing – but still hasn’t delivered it. Instead, it introduced a 40% first-year allowance (FYA), which now does cover leasing. Goldie acknowledged this as meaningful progress:

“It’s better than it was. It’s better than zero. But it’s not quite there.”

The new FYA softens distortions that previously nudged SMEs toward loans and HP purely to access allowances. Still, the lack of full expensing means the system continues to fall short of a truly level playing field.

EV transition muddled: the 3p per mile charge and weak used market support

One of the most intensely debated measures was the new 3p per mile tax on electric vehicles, which the panel agreed poses major questions of fairness, practicality and timing.

Goldie admitted the FLA had encouraged government to start thinking about replacing fuel duty but did not expect an almost immediate implementation:

“Yes, it’ll upset a lot of people, and it’s possibly not the right time to do it… We expected a slower process.”

Jonathan Smart, partner at Shoosmiths and mobility, logistics and manufacturing sector lead, explored the operational complexity. Drivers must estimate their mileage upfront and settle later – a behavioural and administrative shift that will be difficult for many:

“It’s going to take a real movement to get drivers budgeting at the front end of the year… Enforcement is a whole new scheme. Otherwise everyone’s going to be doing 1,000 miles a year.”

Betteley and Smart both believed the EV charge is likely a precursor to a wider road-pricing model, not a standalone measure.

The broader EV landscape looks equally challenging. Smart noted that BEV uptake is plateauing and that the OBR expects 440,000 fewer EV sales over the next five years, putting downward pressure on residual values. Meanwhile commercial EVs and HGVs remain far behind their Zero Emission Vehicle (ZEV) mandate targets.

Betteley quoted Auto Trader’s Ian Plummer, highlighting the government’s mixed messaging:

“This new change is likely to reduce demand for electric cars as it increases their lifetime cost… Does the Chancellor want people to buy electric cars or not?”

Goldie emphasised the real missed opportunity: support for the used EV market, where stock levels are rising, but demand is not.

Markets shrug, business shrugs: a Budget that could have been worse

Despite political drama, the bond markets reacted calmly, with gilt yields edging down. Phillipou said lenders had been watching funding markets closely and the absence of a shock reflected the wider truth: “It could have been worse.”

Goldie argued this was partly because so much of the Budget had been heavily trailed, and because markets see Chancellor Rachel Reeves as competent and steady:

“They think she knows what she’s doing… she didn’t have a great hand that she was dealt.”

For business confidence, Smart summarised the mood:

“It wasn’t as bad as expected… We now know the cards we’ve been dealt. Let’s make the best of the hand.”

Pensions, ISAs and investability: tinkering continues

The panel also explored pension and ISA changes, and what they mean for investor confidence.

Betteley raised concerns about employers being asked to help staff bridge higher pension contributions. Phillipou warned: “If you tinker with pensions every six months, it’s very hard for funds to have any long-term foresight.”

On ISAs, Jonathan Smart questioned the assumptions behind pushing savers toward equities: “Youngsters saving for their first property don’t want short-term instability… It’s actually older savers who are better able to ride out decades of volatility.”

Both Smart and Goldie felt that, despite pressures, Reeves is unlikely to take a heavy-handed regulatory approach in these areas.

Commission disclosure and redress: an ongoing threat to investor perception

Although outside the Budget, commission disclosure and the looming redress process continue to overshadow the auto finance sector.

Betteley noted that the Treasury had made a rare submission to the Supreme Court. Phillipou welcomed the clarity this brought: “It brought it all to attention… fair regulation is the key.”

But he warned of the precedent for international investors: “Could this happen again in other markets that we invest in?… That’s the challenge for investability.”

Smart described the sector’s dilemma starkly: “Would you rather know the number now, or gamble and hope the eventual number is lower? It’s crystal ball gazing.”

The panel agreed that while contagion to other lending sectors is currently unlikely, the reputational effect on UK regulatory predictability is a risk.

Devolution as a potential bright spot

Interestingly, Phillipou saw potential opportunity in the Budget’s devolution push, drawing parallels to Andy Burnham’s growth-focused investment strategies in Greater Manchester:

“That could be where we piggyback this… understand regional growth agendas and help fund them.”

For asset and equipment finance providers, closer alignment with devolved authorities may unlock new avenues for SME lending and infrastructure finance.

But Phillipou warned that redress pressures could squeeze out smaller regional lenders, reversing 20 years of progress toward a more diverse banking landscape.

Pay-per-use and telematics: the Budget nudges the future

Audience questions turned to pay-per-use finance. Phillipou argued that the EV mileage-based tax will accelerate industry innovation:

“It forces our hand… There’s going to be a calculated tax based on mileage. Embedding that in the lease and working out the cash flow—there is a seed here that forces these products to be developed.”

Betteley noted that all modern vehicles are telematics-enabled, making technology feasible even if GDPR obstacles remain.

For Smart, the bigger picture is that mobility-as-a-service (MaaS) becomes more viable: “If you’re starting to use telematics… subscription-style mobility becomes a much more viable business model, especially with the RV challenges on EVs.”

Final verdict: all panellists “40% happy”

To close, David Betteley asked each panellist for one positive takeaway and a happiness score. In a rare moment of unanimity:

• John Phillipou: “40% happy” – first-year allowance progress and better timelines needed.
• Simon Goldie: “40% happy” – leasing within FYA is a meaningful step.
• Jonathan Smart: “40% happy” – the Budget “wasn’t as bad as expected”.

As Betteley concluded, the real impact will become clear only once the industry has examined the fine print: “Often, ten days later people are saying, ‘Hang on a minute—we didn’t see this in the small print.’”

For now, though, the industry moves forward with modest relief, ongoing concerns, and a growing need for a clear, long-term growth strategy. The sentiment stands: about 40% happy… with 60% still to play for.

Watch the full webcast on-demand here.