Business leaders are facing anxiety ahead of the chancellor’s upcoming Budget, following last year’s significant tax increases, including a £25bn rise in National Insurance and a notable increase in the minimum wage. This uncertainty has led to diminished confidence within boardrooms, as various sentiment indicators among CEOs and finance leaders indicate a growing unease.
As the Budget approaches, expectations of further tax increases are present. A report by Capital Economics predicts that the Budget could negatively impact GDP by 0.2% in 2026, which is significant considering the economy’s growth of only 0.1% in the recent third quarter. However, the Bank of England is anticipated to counteract this by potentially lowering interest rates to stimulate borrowing and spending.
Key issues expected in the Budget include addressing business rates, which many companies have seen nearly double due to the reduction of pandemic-era discounts. The chancellor may consider making existing discounts permanent or easing the burden on small businesses when they expand. An upcoming announcement at the Confederation of British Industry (CBI) conference from Business Secretary Peter Kyle may introduce supportive policies, including a consultation to lower energy bills for businesses.
Concerns have been raised about proposed tax increases on bank profits, which may conflict with the government’s pro-growth agenda. Additionally, the oil and gas sector is lobbying for a reduction in “windfall” taxes, citing low oil prices and declining investment in the North Sea.
Further scrutiny exists over the government’s Employment Rights Bill, which aims to provide workers with immediate protections. Business leaders express fears that this could deter hiring. While the government appears to remain committed to these proposals, consultations on their implementation are expected.
As business leaders await the Budget, many are delaying investment decisions, although some express optimism for increased investment afterward, reflecting a delicate balance of hope and caution within the business community.
Source: https://www.bbc.com/news/articles/c1dz7gr042no?at_medium=RSS&at_campaign=rss