In his brilliant analysis of the recent Autumn Budget, Matthew Rowbotham described it as one that “borrows from the young”. It’s a striking turn of phrase, and perhaps an uncomfortable one, because it reframes the Budget not as a moment of fiscal housekeeping, but as a set of deliberate (though not necessarily farsighted) intergenerational choices.

Having given the Budget some time to be absorbed, it is worth stepping back to consider, through a future of work lens, what it signals beyond the immediate headlines, particularly for the UK’s future workforce, skills base and long-term competitiveness.

As seen in our analysis of the latest EU Budget, government Budgets are essentially statements about what capabilities one chooses to invest in now, and which risks or constraints one chooses to defer to later. At a time when the UK wrestles with profound shifts in technology, demographics, global competition, public service resilience, and an increasingly polarised political climate, the distinction between the two matters more than ever. 

This year’s Budget leans heavily toward immediate stabilisation: it prioritises caution, market reassurance, and short-term predictability, which are understandable goals in a fragile macroeconomic environment. However, this approach also raises a difficult question: what version of the UK’s future workforce, productivity model and competitive position are we building? And what version are we, instead, postponing? 

The Budget and its short-termism

A recurring theme in the work of our Future of Work Hub is the widening gap between short-term pressures and long-term capability needs. As our upcoming Future @ Work 2026 Report will show, employers are operating in increasingly volatile scenarios, in which immediate demands, from skill shortages and regulatory shifts to economic pressures and operational firefighting, regularly hinder longer-term investment in future capacity.

Viewed from that perspective, the government’s approach appears to mirror this tension at a national scale and aims to create a fiscal ecosystem optimised for managing the present, but unfit to shape the future. 

The Budget does take steps to restore fiscal stability, notably through a £26 billion tax package, the freezing of income-tax thresholds through to 2031, and tighter rules on pensions and investment income. These measures help repair the public finances in the short term, but they do so by increasing the tax burden on workers over time, reducing disposable income and limiting the space households have to invest in skills, mobility and long-term opportunity. In other words, it strengthens today’s fiscal position by drawing on tomorrow’s earning power. In macroeconomic terms, this is a textbook strategy to stabilise the present while constraining the future.

On a happier note, the Budget also preserves a substantial capital-investment envelope of over £120bn above previous plans. This is positioned as a much-needed boost for infrastructure, transport, energy, digital networks, and regional development, alongside targeted measures for youth employment, streamlined visa routes, and selective R&D incentives. 

These are welcome commitments. However, when set against the UK’s longstanding productivity challenges, recently underscored by the OBR’s downgraded medium-term productivity forecast, they remain too modest to shift structural imbalances. The Budget strengthens today’s position, but the deeper capability challenges shaping tomorrow, from workforce preparedness to innovation capacity, remain largely unaddressed. It is when viewed through a future of work lens that these structural shortcomings become clear.

Future of work implications

Assessing the Budget against what the UK will need to remain future-ready reveals a series of long-standing capability gaps that the Budget does little to close. 

The first relates to productivity and skills. While additional apprenticeship funding and the £1.5bn skills package are welcome, they fall short of addressing the systemic deficits that employers repeatedly highlight: advanced digital capabilities, readiness for automation, and meaningful frameworks for lifelong learning. These gaps have been years in the making, and incremental investment is unlikely to close them at the pace required.

A second tension concerns rising employment costs. Higher labour costs, driven above all by increases in employer National Insurance contributions, alongside the National Living Wage uplift and tighter pension rules, arrive just as many employers face mounting automation and restructuring pressures. Yet the Budget offers no parallel support for managing the transitions these cost burdens to accelerate, such as job redesign, reskilling or redeployment. The result is a landscape in which labour becomes more expensive without the accompanying investment needed to help organisations adapt, potentially amplifying the very capability gaps the Budget leaves unresolved.

The Budget is also notably silent on the need to modernise the tax and expense frameworks that shape how work is organised. Hybrid and distributed working are now defining features of the UK labour market, yet existing rules still implicitly reflect office-centric assumptions, from the tax treatment of commuting and travel to the limited recognition of home-working costs and digital infrastructure. The absence of reform risks locking in outdated models of work, creating friction for employers seeking to design flexible, productive operating models and missing an opportunity to align fiscal policy with the realities of a more distributed workforce.

Similarly, the approach to innovation and technology, while directionally positive, remains modest. Stability in R&D relief is helpful but largely symbolic, and there is little to stimulate AI adoption or digital transformation at scale, especially among SMEs now facing higher costs and tighter margins.

Finally, the Youth Guarantee is a welcome commitment, but it focuses narrowly on young entrants at a time when the UK’s biggest capability gaps sit elsewhere. Mid-career reskilling, green-transition upskilling and support for workers displaced by automation receive limited attention, despite being central to the UK’s ability to manage structural change over the next decade.

Balancing stability and competitiveness

What makes’ the Budget’s caution all the more striking is the gap between what the UK needs to remain competitive and what this settlement actually enables. At the recent xCHANGE2025, Debbie Wosskow OBE reminded us of the UK’s key strengths: entrepreneurial agility, world-class creative and problem-solving capability, a globally attractive leadership and innovation culture, service-led industries with high growth potential, and a uniquely fertile business environment for experimentation. These are real comparative advantages, but they are not self-sustaining: they rely on long-term capability formation, including continuous skills development, supportive infrastructure, regulatory clarity, and policy environments that reward strategic risk-taking.

The contrast between Debbie’s optimism at xCHANGE2025 and the pragmatism of the Budget couldn’t be harder to ignore. Sectors such as digital industries, AI, creative services and high-growth entrepreneurial clusters need patient and coordinated investment to convert potential into durable advantage. Yet many of these areas face flat or delayed settlements, narrow incentives, or insufficient alignment with workforce capability systems.

The risk is not simply underinvestment, but path dependency: a policy mix that stabilises the present while constraining the options available to future workers, employers and policymakers. Without sustained investment in the capability engines of competitiveness, the UK risks narrowing its long-term choices precisely when it needs to widen them.

Who’s going to foot tomorrow’s bill?

Younger generations, including those not yet in the labour market, are likely to bear the greatest long-term consequences of the Budget. They will inherit a labour market defined by more intense global competition for the right people, constrained public finances, and the cumulative effects of longstanding under-investment in skills, public services and infrastructure. Likewise, they will face rising dependency ratios and rapid technological change that demands continuous reskilling.

The burden, however, will not fall evenly. Middle- and lower-income earners, who are already most exposed to automation risk and most reliant on affordable upskilling routes, will see their effective tax rates rise as thresholds remain frozen, reducing the scope to invest in their own development. Young families, particularly reliant on affordable childcare and stable housing, face similar constraints in systems that remain structurally underfunded. Mid-career workers, who are critical to the UK’s transition but often overlooked by policy, risk becoming a ‘missing middle’, needing significant reskilling yet receiving limited state support. Entrepreneurs and small businesses also face weaker incentives due to dividend and savings tax hikes, which could dampen the ecosystems that generate future jobs and innovation.

Overlaying all of this is a tightening fiscal environment: the UK’s tax burden is projected to reach a historic 38% of GDP by 2030, reducing the state’s future ability to fund reskilling, digital infrastructure and transition support when disruption accelerates. In practice, the policy mix does not merely delay spending, but defers capability. And the groups most affected are the same ones the UK will depend on to navigate technological change, productivity renewal and workforce transformation. 

When labour-market pressures are intensifying rather than easing, postponement carries its own cost. The question, then, is not whether the UK can afford long-term investment now, but whether the future workforce can afford for us not to.

What does this mean for employers?

Employers who are keen to future-proof their organisations can draw three lessons from the Budget:

1. Long-term workforce constraints will tighten unless organisations invest ahead of policy:

Skills shortages, mobility barriers, and demographic pressures won’t ease on their own. With public investment moving slowly, organisations will need to accelerate internal capability-building rather than wait for system-level solutions.

2. Productivity growth will depend more on organisational innovation:

Given the limited scale and speed of national investment, productivity gains will need to come from firm-level choices, such as job redesign, technology adoption, better use of data, and sustained development of both technical and human capabilities.

3. Short-term stability does not negate long-term volatility

AI disruption, geopolitical competition and supply chain realignment are accelerating. A fiscally cautious period does not remove the need for scenario planning, anticipatory workforce strategy and long-term investment.

These insights align with findings of our upcoming Future @ Work 2026 report: the organisations that will thrive are those that resist the gravitational pull of short-termism, even when the wider system reinforces it.

Building the future (of work) or borrowing from it?

The 2025 Budget is cautious, stabilising and pragmatic, but it is also shaped by a trade-off between responding to the pressures today of and building the capabilities for tomorrow. Viewed through a future of work lens, that balance tilts heavily toward short-term reassurance at the expense of long-term resilience. In a decade defined by technological transformation, demographic change and intensifying global competition, this tilt risks compounding the very challenges the UK needs to get ahead of.

If this is a Budget that “borrows” from the future, the task now for policymakers, employers and institutions alike, is to ensure the repayment does not come at the cost of the UK’s ability to adapt, compete and thrive in the years ahead.