Consumer and business confidence fell in the UK as Labour’s tax hike budget raised concerns about employment, rising costs and economic growth prospects.
UK consumers and businesses have become more pessimistic about the state of the economy following Labour’s budget tax hike, which has raised concerns about employment and escalating costs.
Recent surveys suggest confidence between British households and the vital services sector has declined this month, undermining the government’s ambitions to permanently lift economic growth to the highest levels in the G7 over the next five years.
According to the British Retail Consortium (BRC), a survey conducted this month found that more households are worried about the economy than before the Budget was announced. The uncertainty has led households to maintain flat spending levels in November compared to October, despite the approach of Christmas, with only a marginal improvement in their personal finances after the Budget.
In a separate study assessing confidence among services sector businesses – which make up about three-quarters of the economy – there was the biggest drop in optimism in two years during the three months to November, interrupting a nine-month trend of improving sentiment.
The Confederation of British Industry (CBI), which conducted the survey, reported that service businesses are suffering from rising wage costs, a situation likely to worsen following the government’s decision to increase employers’ National Insurance contributions from April, which is expected to generate £16 billion. To 20 billion pounds sterling annually.
Alpesh Baliga, interim deputy chief economist at the CBI, noted that the data does not present a “pretty picture,” adding: “Low sentiment, weak hiring intentions, and rising cost pressures are all at least partly a response to the anticipated rise in employer hiring.” . National Insurance Contributions.”
Recent indicators of economic sentiment have fallen in the wake of the government’s £40bn tax hike and warnings of “difficult choices” for public finances. Official data showed a 0.7 percent decline in retail sales in October, ahead of the budget.
The British Retail Consortium survey revealed a two-point drop in household sentiment regarding the state of the economy, down to minus 19. Consumers reported only a one-point improvement in their personal financial situation between October and November, while good intentions remained Total saving and spending remain unchanged. .
Helen Dickinson, chief executive of the BRC, said the retail industry faces a £7bn cost rise due to the National Insurance increase, leaving the sector with no choice but to raise prices or reduce investment in jobs and shops.
“To mitigate this, the government must ensure that changes to the business rates system, planned for 2026, will lead to a meaningful reduction in bills for all retailers,” she said.
National Insurance hikes may derail the steady recovery in employment reported in the private sector this year, according to the Recruitment and Employment Confederation (REC). Its latest survey showed an improvement in economic sentiment in the three months to October and an increase in employers’ confidence in hiring decisions last month.
Neil Carberry, chief executive of the REC, said: “The scale of the changes to Employers’ National Insurance – and particularly the decision to increase tax further for low-income earners – will act as a headwind to employment confidence going forward.” “The Chancellor balanced the books of companies across the country; Now it needs to provide support for growth.
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