Business confidence in the UK has sunk to its lowest level in more than two years, according to a survey by the British Chambers of Commerce (BCC), which highlights the concerns over the tax increase by the Labour government.
Many firms expect a spike in consumer prices in the next three months as companies are expecting to pass on the tax burden to consumers along with the new minimum wage, which was disclosed in the October budget by Chancellor of the Exchequer Rachel Reeves. The firms remarked that business conditions have been weak, and more are pulling back their investment in the past three months.
BCC’s Quarterly Economic Survey result is likely to cause some distress to Reeve, as he expects a boom in business growth from heightened investment. The UK’s economy has stagnated since Labour’s landslide victory in the July election, which came amidst a backlash against the party’s GBP 40 billion budget tax rises and GBP 26 billion increase in the national insurance payroll, which would be imposed on employers.
Borrowing costs have also shot up in anticipation of inflation.
Shevaun Haviland, director general of the BCC, said that business confidence has fallen as a result of pressure from rising costs and taxes.
In the survey, 63% of firms are concerned about tax, the highest in the record which began in 2017, highlighting a significant decline in business confidence. Only 49% expected an increase in turnover in the next year.
55% of companies said that they would recuperate costs by increasing prices in the upcoming quarter with only 2% cutting their prices down, escalating concerns over inflation rebound.
