By David Milliken
LONDON (Reuters) – British companies are the gloomiest since former Prime Minister Liz Truss’ September 2022 “mini-budget”, following unexpectedly large tax increases in the new Labour government’s Oct. 30 budget, a business survey showed.
The British Chambers of Commerce, who conduct the largest private-sector survey of British firms, said businesses were the least happy about taxation since they started asking about this in 2017, while confidence about sales over the next 12 months was the lowest since late 2022.
“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,” BCC Director General Shevaun Haviland said.
Finance minister Rachel Reeves announced 40 billion pounds ($50 billion) of tax rises on Oct. 30, the most of any budget since 1993. The bulk of this will come through higher social security charges paid by employers.
While the Bank of England estimates that higher public spending will temporarily boost growth next year, a big question for policymakers is whether the tax rises lead mostly to lower employment, higher prices or reduced profits or investment.
The BCC said 55% of firms planned to raise prices, up from 39% the quarter before, while 24% intended to cut investment, up from 18% previously. It plans to release survey data on recruitment intentions on Jan. 14.
The downbeat mood echoes that in other surveys of businesses from S&P Global, the Institute of Directors and the Confederation of British Industry.
Britain’s economy grew solidly 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 forecast zero growth for the fourth quarter of 2024 and an expansion of 1.5% in 2025.
The BCC survey of 4,800 businesses, mostly with fewer than 250 staff, took place from Nov. 11 to Dec. 9.
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