Is Labour really helping business? Confidence over UK economy plummets as tax rises and workplace reforms loom _ Hieuuk
Business confidence slumped this month in another sign that Sir Keir Starmer’s corporate love-in is on the rocks.
Bosses also reported feeling more pessimistic about the economy amid fears of a tax-raising Budget next month.
In a closely-watched survey, firms’ confidence dropped three points to 47pc – the lowest for three months.
By sharp contrast, in July and August confidence hit 50pc, according to the Lloyds Bank Business Barometer, which quizzed a sample of 1,200 businesses.
And Lloyds’ metric for economic optimism has dipped from an eight-year high last month to 38pc in September. Nearly 1 in 5 businesses said they felt less confident in the economy compared to August, meaning economic optimism hit its lowest level since March.
Business confidence has slumped this month as Sir Keir Starmer prepares to introduce tax rises and workplace reforms
There are concerns in the City that doommongering from Sir Keir and his chancellor Rachel Reeves risks becoming a self-fulfilling prophecy
Despite the weakening positivity, statisticians at Lloyds said firms were still bullish about their own trading prospects and keen to invest in jobs.
There are concerns in the City that doom and gloom messaging from Sir Keir and Rachel Reeves risks becoming a self-fulfilling prophecy.
The Chancellor claimed last month that Labour had been left with ‘the worst set of circumstances since the Second World War’.
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And Sir Keir then said the inheritance was so bad that a ‘painful’ Budget would be needed in October, adding: ‘Things will get worse before they get better.’
The latest numbers suggest that many employers are ‘maintaining a degree of caution,’ said Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking.
‘While we still expect economic expansion, it may occur at a slower rate than the first half of 2024,’ he warned.
There were calls from within the City for more positive mood music around the economy this week after the UK was given the biggest growth upgrade in the G7.
The Organisation for Economic Cooperation and Development (OECD) said Britain’s gross domestic product (GDP) will grow by 1.1 per cent this year, up from a previously forecast 0.4 per cent.
During the election campaign, Ms Reeves insisted she would be the most ‘pro-growth’ Chancellor in history.
After claiming to have found a £22 billion ‘black hole’ in public finances, Ms Reeves has said she will not hike VAT, national insurance or income tax – sparking uncertainty over business taxes.
Ms Reeves has previously insisted she will be the most ‘pro-growth’ Chancellor in history and has committed to not hiking VAT, national insurance or income tax
Firms are hoping ministers will echo Tony Blair’s New Labour approach of close consultation with businesses
Separate data from KPMG also today reveals that 28pc of financial services chiefs are braced for the Budget to have a ‘significant impact’ on their businesses.
Almost a third believe the largest consequence will be sector-specific tax hikes.
‘It’s not completely unexpected to see a dip in confidence after a post-election high, but the speculation surrounding the Budget could be compounding this,” said Karim Haji, Global and UK head of financial services for KPMG.
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‘This will drive greater need for clarity and certainty when it comes to financial services policy and plans to maintain the UK’s standing as a global financial centre.’
And firms are anxiously hoping to thrash out details of changes to employment rules and corporate taxes in the coming weeks.
They are hoping ministers will echo Tony Blair’s New Labour-era approach of heavily consulting with businesses.
In particular, some firms are on edge over plans for Labour’s ‘New Deal for Working People’, a union-friendly package of workers’ rights.
Anti-strike measures will be torn up, including removing minimum thresholds in ballots on industrial action. Staff will also have the right to demand ‘flexible working’, including from home and doing a four-day week.
Another cause for concern is the proposed new ‘right to switch off’ which would discourage employers from contacting staff outside their set working hours.
