King’s Speech 2026: Economic growth plans, rising debt and what it means for UK businesses
Written by Bob Woods (pictured), founder of Mattioli Woods
One can only assume that whoever was tasked to draft the King’s speech opening Parliament must have wished for a crystal ball given the uncertainty as to who will be Prime Minister by the end of the year.
As a consequence, the speech was unsurprisingly splattered with platitudes such as the King’s opening remark: “An increasingly dangerous and volatile world threatens the United Kingdom, with the conflict in the Middle East only the most recent example. Every element of the nation’s energy, defence, and economic security will be tested.”
And so, it went on.
Approximately halfway through the speech, the King made a statement that his Government believes the UK should be a country where every child is included in the nation’s highest aspirations.
This acknowledges a worrying trend of increasing youth unemployment in the UK now standing a little higher than the EU average at around 15 per cent.
This endorses the reason why restoring growth to the UK economy is so important – it’s not just to create the additional tax revenues that are needed to support our social infrastructures, but to create sustainable and meaningful opportunity for the young.
Repeated references were made to the Government’s intention to invest in and support growth, particularly in infrastructure, but unsurprisingly, there was little in the speech that referenced the dire state of the country’s finances that will constrain the Government’s ability to invest.
The national debt now stands close to £3 trillion and represents very approximately 95 per cent of the UK’s GDP.
Annual spending in the year 2025/26 is estimated at circa £1,368 billion with a shortfall in revenue of circa £133 billion, which will therefore have to be financed by further debt.
The interest rate on ten-year Government bonds exceeded 5 per cent very recently, and the Office of Budget Responsibility’s most recent forecast for the total net debt annual interest payment is now in excess of £100 billion, rising to over £120 billion by 2029.
Accordingly, the Government’s challenge (whoever may be Prime Minister) is that any additional investment, be that in infrastructure or other projects, may only be financed with further debt at eyewatering interest costs. This can only create more concern within bond markets.
In summary, there was little or no indication of any cost cutting, so the Chancellor (whoever that may be!), will, as has become the norm, have to face very difficult decisions.
If the King's Speech has raised any questions about what the changes may mean for your business, our team is here to help. Get in touch with us today.