UK business morale hits two-year low after tax rises, survey shows By Reuters

By David Milliken

LONDON (Reuters) – British companies are the gloomiest since former prime minister Liz Truss’ September “mini budget” for 2022, after the new Labor government’s unexpectedly large tax hike in its budget on October 30, a business survey showed.

The British Chambers of Commerce, which runs the largest private sector survey of British companies, said businesses were the least happy about taxation since they started asking about it in 2017, while confidence about sales over the next 12 months was the lowest since the end of 2022. : .

“The troubling effects of the budget are clear from our survey data. Business confidence has taken a beating from rising costs and tax pressures,” said BCC chief executive Chevon Haviland.

Chancellor of the Exchequer Rachel Reeves announced 40 billion pounds ($50 billion) in tax increases on October 30, the largest of any budget since 1993.

While the Bank of England estimates that higher government spending will temporarily boost growth next year, the big question for policymakers is whether the tax hikes lead mainly to lower employment, higher prices or lower profits or investment.

The BCC said 55% of firms planned to raise prices, up from 39% in the previous quarter, while 24% planned to cut investment, up from 18% previously.It plans to publish on Jan. 14 of inquiries data on collection intentions.

The poor sentiment is echoed in other business surveys by S&P Global, the Institute of Directors and the Confederation of British Industry.

The UK economy grew steadily in the first half of 2024 as it recovered from a shallow recession in late 2023 before stagnating in the third quarter of last year.

The Bank of England has predicted zero growth for the fourth quarter of 2024, and 1.5% growth in 2025.

The BCC survey of 4,800 businesses, mostly with fewer than 250 employees, was conducted between November 11 and December 9.

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