UK businesses are postponing investment and hiring plans in anticipation of next month’s Budget, concerned that the Chancellor may impose further fiscal measures to address the UK’s financial deficit for the second consecutive year.
A recent survey of small and medium-sized enterprises found that over four in five (84%) business leaders are apprehensive about potential tax increases affecting their profit margins, following last year’s significant £40 billion tax rise. Additionally, three-quarters of respondents have deferred major decisions regarding hiring and investment until after the Chancellor’s announcement on 26 November.
Andreas Adamides, head of the entrepreneurs’ group Helm, which commissioned the study, commented, “These figures are a flashing red light on the UK’s economic dashboard. When more than 80% of business leaders are bracing for tax hikes and three-quarters have hit pause on investment, it’s clear the engine of growth is idling when it should be accelerating. The Chancellor must remember that confidence is the oxygen of enterprise — without it, ambition suffocates.”
The findings increase scrutiny on the Chancellor’s decision to deliver the main fiscal event of the year in late November, weeks after the usual timing in late October or early November. The delayed date may benefit Rachel Reeves with a fiscal windfall due to lower than expected inflation, resulting in reduced government borrowing costs compared to a month ago. However, industry leaders and economists have warned that it could impact businesses’ ‘golden quarter,’ the crucial period from October to December when many firms experience peak trading.
Panmure Liberum’s chief economist Simon French noted last month that the late Budget date could negatively affect the UK economy, as speculation over tax increases prompts both business leaders and consumers to delay spending plans.
Adamides further stated, “The Autumn Budget must light a fire under Britain’s growth ambitions. That means no new taxes on business, real incentives for investment, and a clear signal that the UK is open for growth. Give businesses the green light to drive our economy forward.”
