Home Business British business confidence is at a 12-month low as the autumn budget approaches

British business confidence is at a 12-month low as the autumn budget approaches

by trpliquidation
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Business confidence in the UK has taken a sharp downturn, recording its first decline in a year, as concerns mount over Chancellor Rachel Reeves' forthcoming Autumn Budget.

Business confidence in Britain has suffered a sharp decline, recording its first fall in a year, as concerns mount over Chancellor Rachel Reeves’ upcoming autumn budget.

The latest economic data, along with insights from Prism’s upcoming SME Barometer, highlight growing concerns among businesses, with many fearing significant fiscal challenges ahead.

The Institute of Chartered Accountants in England and Wales (ICAEW) reports that business confidence fell to 14.4 in the third quarter of 2024, down from 16.7 in the second quarter. This decline marks a significant shift in sentiment as sluggish business growth and a deteriorating economic outlook take hold. Prime Minister Sir Keir Starmer’s recent warning that the upcoming budget “will be painful” has only added to these concerns.

Declining business confidence

The latest Lloyds Bank Business Barometer shows that business confidence fell to 47% in September, the lowest level in three months. While companies remain optimistic about their own trading prospects, there is widespread disquiet across the broader economic landscape. This suggests that while businesses may feel secure in their individual operations, they are losing confidence in Britain’s overall economic direction.

SMEs are concerned about the budget

Prism’s upcoming SME Barometer reveals troubling prospects for small and medium-sized enterprises (SMEs). The data shows that:

– 75% of SMEs express concern that political uncertainty could have a negative impact on their activities.
– 78% are concerned about budget problems after the budget, with fear of tax increases at the forefront.

The tax burden is emerging as a major issue, with 29% of businesses citing this as a major barrier to growth. ICAEW data shows that the most affected sectors are energy, water and mining (44%), real estate (38%) and retail and wholesale (32%).

Sectoral variations that raise concerns

The varying levels of concern across industries highlight the uneven impact of potential fiscal measures. Resource-intensive sectors, such as energy and mining, are particularly vulnerable to changes in the tax regime due to their high fixed costs and their dependence on stable fiscal conditions. Real estate and retail companies are also feeling the pressure as they brace for potential increases in operating costs due to tax increases or regulatory changes.

A turning point for the British economy

The decline in business confidence is particularly significant given the relative stability of the past year. This shift comes at a crucial time for the UK economy, as businesses face ongoing challenges such as inflation, labor shortages and rising energy costs. The approaching Autumn Budget is seen as a crucial moment that could restore or further erode confidence, depending on the measures announced.

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