London: Business confidence in the UK has plunged to its lowest level since the COVID-19 pandemic, according to the latest report from the Institute of Directors (IoD). The findings come after the introduction of tax rises in Finance Minister Rachel Reeves’ first budget on October 30.
In November, a measure of business leaders’ optimism dropped to -65, the worst figure since April 2020, down from -52 in October. Investment plans and employment intentions also fell to their weakest since May 2020, reflecting growing concerns among business owners about the current economic climate.
IoD Chief Economist Anna Leach commented, “As businesses continue to absorb the consequences of the Budget for their business plans, confidence has continued to plummet. 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 report adds to the mounting frustration among businesses, which have voiced dissatisfaction since the budget was announced. These concerns are compounded by other indicators pointing to an economic slowdown.
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In response, Reeves assured the Confederation of British Industry that she would not seek to raise taxes or increase borrowing in future budgets. However, the budget included £40 billion ($51 billion) in tax rises, including a £25 billion increase in employers’ annual social security contributions. While Labour had initially indicated tax rises of about £8 billion before the election, Reeves attributed the additional increases to a worse-than-expected fiscal legacy left by the previous Conservative government.
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The IoD also noted that a planned tightening of employment laws could further raise costs for employers, exacerbating the strain on businesses already grappling with economic challenges.
The IoD survey, conducted between November 15 and November 27, gathered 601 responses, predominantly from small businesses, shedding light on the growing uncertainty in the UK business landscape.
