Aerial view of London’s Canary Wharf financial district, two days before the government presents its critical pre-election budget.
LONDON, Oct 9 (Reuters) – British business confidence took a hit in the third quarter, primarily due to concerns over taxes affecting investment, according to a recent survey of accountants. This sentiment aligns with similar apprehensions expressed by various business groups ahead of the new Labour government’s inaugural budget.
The Institute of Chartered Accountants in England and Wales (ICAEW) reported on Wednesday that its quarterly Business Confidence Monitor dropped to 14.4 for the three months ending in September. This marks the first decline in a year, down from 16.7 in the previous quarter.
“The findings reveal that businesses are increasingly troubled by the tax burden and are becoming more hesitant to invest,” stated ICAEW chief executive Alan Vallance.
Finance Minister Rachel Reeves has indicated that taxes may need to increase in her budget presentation on October 30, following the discovery of a £22 billion ($29 billion) deficit in this year’s public finances, a consequence of the previous Conservative government’s policies.
The ICAEW survey found that 29% of companies identified the tax burden as a growing challenge, the highest level recorded since the survey began in 2004 and significantly above the average of 16%.
In a separate survey released by the British Chambers of Commerce on Tuesday, a decline in business morale was also noted, driven by concerns regarding the potential impact of the upcoming budget on tax levels.
Although the government has ruled out raising income tax, corporation tax, value-added tax, and National Insurance contributions, the ICAEW highlighted that businesses remain anxious about other potential tax increases, including the possibility of raising capital gains tax.
As a result, companies have slightly adjusted their investment plans, with firms in the ICAEW survey now projecting a 1.9% increase in investment over the next 12 months, down from the previously anticipated 2.1%.
Prime Minister Keir Starmer is set to host an international investment summit on October 14, aimed at enhancing foreign direct investment to spur economic growth—a key objective since he assumed office in July.
“As the UK prepares for a significant investment summit amid budgetary speculation, the Chancellor must provide businesses with the certainty and stability they require,” Vallance emphasized. “Reforms to VAT and business rates, coupled with both public and private investment, could help achieve this.”
Related Topic:
Embracing Neurodiversity: A Catalyst for Positive Business Transformation
Steve Cram and Allison Curbishley to Headline Worcester Business Expo
Small Business Administration Approaches Funding Limit Amid Disaster Challenges
