Optimism about the UK economy has plummeted to levels last seen during start of the Covid pandemic following Labour’s tax hiking Budget and a summer of talking down the nation’s finances.
In a fresh blow to Chancellor Rachel Reeves, a new survey has revealed that business confidence in November was at its lowest level since April 2020 – just weeks after the first lockdown was announced.
More than 600 top bosses responded to the survey by the Institute of Directors (IOD), with many blaming the Chancellor’s tax hiking Budget for their pessimism.
The gloomy picture means the UK economy is now at risk of grinding to a halt, the IOD warned, as businesses plan to cut back investment.
Anna Leach, chief economist at the IOD, said: ‘As businesses absorb the Budget confidence has continued to plummet and is approaching the lows reached at the onset of the Covid pandemic.
Optimism about the UK economy has plummeted to levels last seen at the start of the Covid pandemic following Labour ‘s tax-hiking Budget , according to a survey
Shadow business secretary Andrew Griffith said: ‘The survey shows a catastrophic loss of business confidence under this government’
‘Far from fixing the foundations, the Budget has undermined them, damaging the private sector’s ability to invest in their businesses and their workforces.’
The survey is yet another blow to Reeves who has come under heavy fire after she unveiled £40 billion of tax rises in October.
Business support has ebbed as a result of concerns over Labour’s workers’ rights package, as well as an increase in the national minimum wage and higher employers’ National Insurance payments.
Reeves has countered that the Government needed to raise money to restore stability to public finances and repair public services. She has tried to ease business fears by saying she will not have to raise taxes on that scale again.
But the IOD said that her rhetoric has damaged confidence, adding that the tax measures were unlikely to re-fill the public coffers.
‘We are concerned that the combination of how inheritance tax and business property relief reforms will serve to undermine growth and ultimately the public finances too,’ Leach added.
The stinging verdict from the IOD follows that from the Confederation of British Industry last week – which warned that businesses could not afford to expand and take on new people.
Andrew Griffith, shadow business secretary, said: ‘The survey shows a catastrophic loss of business confidence under this government.
‘Business leaders tend to have a natural optimism but the summer of trash-talking the economy, Labour’s jobs tax and the trade-union inspired Employment Bill are knocking the stuffing out of their confidence. It is jobs and investment that will pay the price.’
The IOD called on Reeves to strike a more upbeat tone and inject some positivity back into the economy.
‘We urge the government to look for opportunities to ameliorate the negative impacts of the Budget and reposition the growth narrative more positively.’
Results of the survey showed that confidence was recorded at minus 65 in November, down from minus 52 in October.
The record low was minus 69 in April 2020.
