British business is ‘bruised’ and cannot take ‘another Budget battering’, Rachel Reeves was warned last night. In a hard-hitting report, the British Chambers of Commerce (BCC) said confidence among employers remains stuck at three-year lows as fears of another round of tax hikes mount.
Less than half of firms expect trade to pick up over the next 12 months as the economy continues to reel from the £40billion of extra taxes announced in last year’s Budget. That included a £25billion raid on national insurance contributions (NICs) paid by business which pushed up the cost of employing staff – leading to job losses and higher prices.
The survey of more than 4,600 firms found that tax ‘continues to be the biggest concern for businesses’ as the Chancellor plots another punishing raid next month. It is feared she could announce fresh tax rises to the tune of £30billion to plug a hole in the finances as a floundering economy and lavish government spending take their toll.
David Bharier, head of research at the British Chambers of Commerce, said: ‘Firms remain bruised and are not ready for another Budget battering. ‘Our message to the Chancellor ahead of the Budget is clear – no further tax rises on business.’ The comments echoed those of Tesco chief executive Ken Murphy who last week declared: ‘Enough is enough.’ The BCC said that without ‘urgent action’ to boost business ‘confidence could deteriorate further, putting economic growth at risk’.
Shadow chancellor Sir Mel Stride said: ‘Another day, another report confirming what businesses already know – confidence in the economy is collapsing. ‘Business confidence has been shattered – not by global uncertainty, but by deliberate choices made by Rachel Reeves.’ A separate report by KPMG and the Recruitment and Employment Confederation (REC) showed demand for new staff falling as firms put off hiring.
KPMG chief executive Jon Holt said: ‘With very little positive news out there on the economy in recent months, and lots of speculation about the Budget, it is understandable that employers are cautious with their hiring.’ And the British Retail Consortium (BRC) said confidence among households is also on the slide, with cautious shoppers worried about the Budget reining in spending.
‘Low consumer confidence ahead of a potential tax-rising Budget kept many shoppers away in September,’ said BRC chief executive Helen Dickinson. The BCC survey found 59 per cent of firms now cite tax as a worry – up from just 36 per cent ahead of last year’s Budget. The report also found ‘a sharp rise in concern about inflation ’ which is now identified as a worry by 57 per cent of firms – the highest level since the start of 2024.
Ms Reeves’ hike in national insurance contributions paid by business has been blamed for pushing up inflation as companies facing higher costs raise prices. Inflation had fallen to 1.7 per cent before the Budget last October but now stands at 3.8 per cent – nearly twice the 2 per cent target and the highest in the G7. Mr Bharier said: ‘For twelve months, SMEs have told us the same story: rising costs, weak investment, and little sense of relief on the horizon. The employer NICs increase has been the most widely cited source of pressure, hitting investment and pushing up prices. The proportion of businesses expecting to raise prices remains worryingly high, driven primarily by labour costs. Inflation now sits alongside taxation as a top concern.’
He added: ‘Persistent weak sentiment this quarter may suggest that many firms have already priced in a tough Budget. But further surprise measures that hit business, like those seen in 2024, could drive confidence even lower. What businesses need now is certainty and a long-term strategy, not more ad hoc policy shifts.’
REC chief executive Neil Carberry called for a ‘pro-growth’ Budget and reforms to Labour’s workers’ rights bill to provide ‘a shot of confidence in the wider economy to get things going’. He said: ‘The economic picture is still challenging for employers, with pressures beyond their control. A genuinely pro-business, pro-growth Autumn Budget next month could provide much-needed relief, by avoiding unaffordable tax rises on business, committing to real practicality on the Employment Rights Bill, supporting flexible work and reforming public sector hiring.’
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