Businesses leaders are bracing for more tax rises even following another hefty cash raid from Rachel Reeves in her second Autumn Budget.
Over two thirds of top bosses have said they fear business leaders will be targeted with more tax hikes even after the Chancellor raised taxes to the tune of £26bn on Wednesday.
A number of businesses bore the brunt of this figure, with Reeves inflicting taxes on the gambling industry and accused of botching her reform of business rates.
WPI Strategy and Merlin Strategy’s ‘Business Confidence Barometer’ – which tracked the views of 500 business leaders after the Budget – showed a majority of leaders would make fewer hires than previously planned.
One in three directly blamed this on the Budget and added the stall in hiring could reach the highest levels since the Second World War.
Bosses said the most damaging policy inflicted by Labour was the freeze on income tax – a move widely viewed as breaking the government’s 2024 manifesto.
Nearly half said the stealth tax raid would have a negative impact on staff and their businesses, but were also divided on whether the change was justified.
Businesses on edge by UK’s vulnerable finances
Despite the avalanche of taxes, economists have warned the country was left in a “relatively weak fiscal position” due to the debt and GDP balance being well above the levels of 20 years ago.
Michael Saunders, a former Bank of England rate-setter who is now senior economic adviser at Oxford Economic, said: “The UK is still not securely on a sustainable fiscal path.”
The fiscal watchdog has also warned: “While this Budget addresses some fiscal risks and increases the margin held against the government’s fiscal targets, it still leaves the UK public finances relatively vulnerable to future shocks”.
It is this vulnerability that has continued to spike the fears of businesses that Rachel Reeves will once again return for more tax rises, even after pledging not to do so in this year’s Budget.
Firms across the country have still been left reeling after the Labour government’s first Budget hiked employer’s national insurance contributions 1.2 per cent.
A snap poll from the Institute of Directors that covered over 500 business leaders thoughts on the Budget, showed firms were responding overwhelmingly negatively to Reeves’ new fiscal package.
Anna Leach, chief economist at the Institute of Directors, said: “This Budget has landed badly with business leaders.”
Leach added: “Firms are telling us that this will hit hiring and investment intentions further, with many also planning to review their pension arrangements…
“After a prolonged and messy Budget period, businesses remain unconvinced by the government’s growth strategy.”