UK business confidence slips as fears grow over budget tax hike, says BCC By Reuters

LONDON (Reuters) – British firms grew more pessimistic about the outlook as concerns over the fiscal impact of the new Labor government’s upcoming autumn budget and conflict in the Middle East dampened sentiment, a survey showed on Tuesday.

The British Chambers of Commerce said 48% of the 5,152 companies they surveyed between August 19 and September 16 reported taxation as a main area of ​​concern ahead of the Budget. This is up from 36% in the previous survey.

“Many companies are increasingly concerned about the direction of economic policy and taxation has now become their main concern,” said David Bharier, head of research at the BCC. “The major escalation of the conflict in the Middle East will also be a significant factor.”

British Chancellor of the Exchequer Rachel Reeves, who is due to deliver her inaugural autumn statement on tax and spending, has warned that some taxes could rise in the October 30 budget.

Reeves is expected to change the government’s fiscal rules to reduce public debt, which could pave the way for more borrowing, potentially helping to boost investment and economic growth.

British government debt reached 100% of economic output in August – levels not seen on a sustained basis since the early 1960s.

The BCC survey showed that 56% of companies expected turnover to increase over the next 12 months, down from 58% in the second quarter, and most no longer expected profits to increase.

Just over one in five said they had increased investment.

“Investment levels remain the Achilles’ heel of the UK economy. Despite interest rates starting to fall and inflation easing, most SMEs (small and medium-sized enterprises) are still reluctant to invest,” Bharier said.

Concerns about interest rates and inflation continued to ease, the BCC said.

The Bank of England is expected to cut borrowing costs at its next meeting in November, after its first cut in more than four years in August and a pause in September.