Firms are now more concerned about possible tax hikes in the budget than they are about inflation or interest rates, a new survey suggests.
The British Chamber of Commerce’s (BCC) quarterly economic survey showed that 48 per cent of firms cited taxation as a worry, up from 36 per cent the quarter before.
This meant that tax was the single biggest concern for businesses last quarter, with firms in professional services and construction sectors most likely to cite it as a concern.
“Many businesses are increasingly anxious about the direction of economic policy, and taxation has now become their primary concern,” David Bharier, head of research at the BCC, said.
The BCC’s survey also showed a slight decrease in business confidence, with 56 per cent of firms expecting to see revenue increase over the next year, down from 58 per cent the quarter before.
A number of recent surveys have pointed to worsening sentiment among both households and businesses as the budget draws ever nearer.
Ever since the discovery of the alleged £22bn ‘black hole’ in the public finances back in July, businesses have been concerned about the prospect of tax hikes.
Although the government has pledged to leave corporation tax unchanged, Rachel Reeves is expected to increase capital gains tax and could make employers pay national insurance on pension contributions.
More broadly, many economists have warned that Reeves’ rhetoric has been too gloomy and risks putting firms off investing in the UK.
The survey showed that only 23 per cent of firms had increased levels of investment over the past three months.
Shevaun Haviland, director general of the BCC, said businesses are “clearly anxious” given all of the speculation about tax hikes.
“They understand the fiscal backdrop the Chancellor is facing and the need for the Government to address public finances. However, that must not be at the expense of investment and growth,” she said.