Chancellor urged to rule out tax hikes on firms in Budget
Rachel Reeves has been urged to rule out further business tax hikes after new figures indicated a deepening downturn in the private sector.
Latest data from the Confederation of British Industry (CBI) revealed that business activity fell sharply in the three months leading up to September—the steepest decline since the pandemic began. This comes amid growing fears that the Chancellor may impose additional taxes in the upcoming November Budget to address a financial shortfall estimated to be as high as £30 billion.
Businesses are still grappling with the effects of Reeves’ budget last year, which raised employer National Insurance contributions. This increase made it more expensive for firms to hire workers, a policy widely criticized for damaging the job market and contributing to inflationary pressures. Following that budget, the Chancellor promised no further tax increases but has since softened that stance.
CBI deputy chief economist Alpesh Paleja highlighted a “renewed nervousness” among businesses ahead of the Budget, emphasizing concerns about being “asked to again shoulder the burden of fixing the public finances.” He said:
> “The business tax burden is already at a 25-year high and the Chancellor must quickly reaffirm last year’s commitment to no more business tax rises, avoiding Budget speculation that could further curtail sentiment in the run-up to November 26.”
Paleja added that reaffirming this commitment would boost confidence and accelerate the significant contribution businesses wish to make toward shared economic growth.
The CBI’s latest monthly growth measure, which subtracts the proportion of firms reporting falling output from those reporting rising output, showed a reading of minus 32 percent. This marks the 16th consecutive month of decline and is the lowest level since August 2020. Meanwhile, expectations for growth over the next three months worsened to minus 20 percent—the lowest since May.
Paleja noted that weakness in private sector activity shows no signs of easing and is expected to continue through the end of the year. He explained that firms are citing “lacklustre” demand alongside cautious spending and investment decisions. Additionally, both the National Insurance hike and the rising minimum wage are continuing to impact firms’ bottom lines, while persistent global economic uncertainty further hinders decision-making.
With these challenges mounting, business leaders are calling on the Chancellor to provide reassurance and avoid more tax burdens that could stifle growth and confidence in an already fragile economic environment.
https://www.thisismoney.co.uk/money/markets/article-15142359/Chancellor-urged-rule-tax-hikes-firms-Budget.html?ns_mchannel=rss&ns_campaign=1490&ito=1490
