Business confidence in Britain has fallen to its lowest level since the immediate fallout from Liz Truss’s mini-Budget, according to new data from the British Chambers of Commerce (BCC).
The researchers found that 49 percent of the 4,808 companies surveyed expect income to rise over the next 12 months, consistent with sentiment levels from the last quarter of 2022.
This recession coincides with Chancellor Rachel Reeves’ decision to raise £40 billion in taxes, mostly targeting businesses. Increases in National Insurance contributions, including a rise in employers’ National Insurance contributions to 15 per cent from 13.8 per cent and the introduction of minimum contributions, have destabilized UK businesses, with more than six in ten citing tax as a source of Great concern.
However, a separate report by KPMG suggests that despite the decline in confidence, the UK economy is likely to grow faster than expected this year, supported by the Chancellor’s additional public spending and an expected fall in interest rates to around 4 per cent. KPMG forecasts growth of 1.7 per cent in 2025, up from 0.8 per cent last year, although it warns that inflation will remain above the Bank of England’s 2 per cent target until 2027.
Liz Truss’s short-lived premiership saw a £45 billion package of unfunded tax cuts spark turmoil in financial markets, forcing emergency intervention from the Bank of England. Reeves’ October budget took a different approach, opting for a mix of tax rises and £30bn in extra borrowing to fund the biggest public investment program in a generation.
Shevon Haviland, director general of the BCC, criticized the chancellor’s actions, warning that companies “have already begun to reduce their investments and say they will have to raise prices in the coming months.” KPMG economists have echoed these inflationary concerns, noting that companies facing higher taxes may incur increased costs just as fiscal stimulus fuels demand in the short term.
A Treasury spokesman defended the budget, describing it as a “one-off” measure aimed at restoring stability and giving businesses some certainty in a challenging environment.