UK Business Confidence Plummets to Lowest Since COVID After Tax Hikes

LONDON, Dec 1 (Reuters) – The Institute of Directors (IoD) in Britain reported a significant drop in optimism among its members. This decline is the lowest recorded since the COVID-19 pandemic began. The drop follows tax increases in finance minister Rachel Reeves’ first budget on October 30.

Investment plans and employment intentions have reached their lowest level since May 2020. A measure of business leaders’ optimism fell to -65, down from -52 in October.

IoD Chief Economist Anna Leach stated that businesses are struggling with the effects of the budget on their plans. She noted that the budget has hurt the private sector’s ability to invest in both business and workforce.

The IoD’s findings reflect widespread concerns among businesses regarding the budget and signs of an economic slowdown. Last week, Reeves assured the Confederation of British Industry that future budgets would not include more borrowing or tax increases.

In her budget, Reeves announced £40 billion ($51 billion) in tax hikes. This included a £25 billion rise in employers’ annual social security contributions. The IoD also mentioned that a planned update to employment laws could lead to higher costs for employers.

The IoD conducted the survey from November 15 to November 27, gathering 601 responses, mainly from small businesses.