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Business confidence at lowest level since Truss mini-Budget due to tax worries

A major survey has demonstrated how business confidence has declined and is at low levels

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There were significant tax rises on businesses in Rachel Reeves’s first Budget in October (Photo: Dan Kitwood/Getty Images)
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Business confidence has declined to the lowest level since Liz Truss’s mini-Budget in 2022, according to a major survey.

The British Chambers of Commerce (BCC) Quarterly Economic Survey has found that concern around tax has spiked since October’s Budget – Labour’s first in 14 years – with just 49 per cent of responding companies expecting their turnover to increase over the next 12 months.

The figures, collected after the Budget from a survey of 4,800 businesses, show a decline from 56 per cent in the three months prior.

Some 63 per cent of firms cited tax as a worry, compared with 48 per cent in the third quarter of the year.

There were significant tax rises on businesses in Rachel Reeves’s Budget, with employers’ national insurance contributions being hiked from 13.8 per cent to 15 per cent.

Shevaun Haviland, director general of the BCC, said: “The worrying reverberations of the Budget are clear to see in our survey data. Businesses confidence has slumped in a pressure cooker of rising costs and taxes.

“Firms of all shapes and sizes are telling us the national insurance hike is particularly damaging. Businesses are already cutting back on investment and say they will have to put up prices in the coming months.

The figures come at the same time as a separate piece of research from the Federation of Small Businesses (FSB) found that 92 per cent of small employers are worried about the Employment Rights Bill, with 67 per cent saying they plan to recruit fewer staff, and 32 per cent set to reduce headcount.

Among other measures, the bill will require employers to justify the refusal of flexible working requests and remove the three-day waiting period for statutory sick pay so employees are eligible from the first day of illness or injury.

It is currently being assessed by parliament’s business committee of cross-party MPs.

Tina McKenzie, FSB’s policy chair, said: “Small firms have made it crystal clear that the Bill will not motivate them to hire more whatsoever. Their feedback is emphatic, resounding, and overwhelming.

“Ministers must show they get the risk to jobs and avoid a cavalier, dogmatic or patronising approach to the loud and clear feedback from small businesses. The economy is in no fit state for a ‘war on work’.

“If employers fear they will be sued, fewer will hire – with knock-on effects including a rising benefits bill and a lasting drag on living standards across the UK.

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