Blow for Reeves as business confidence at near record low after Budget
The Institute of Directors has warned that business confidence is at an almost record high after the budget.
Following Ms Reeves’s announcements, which included an above-inflation increase in the minimum wage from April, industry leaders are more likely to believe revenues will fall and companies will invest less, a survey by the IOD has found.
IOD chief economist Anna Leach said the deterioration in its prospects was “worrying” and called on Rachel Reeves to do more to improve economic growth prospects.
Following the budget, All Bar One owner Mitchells & Butlers warned it would face extra costs of around £130 million next year due to higher wages and rising food prices.
The IoD Directors’ Index of Economic Confidence, which measures the optimism of business leaders in the UK economy, remained at an almost record low of -73 in November, unchanged from October. In the snap survey conducted right after the budget, the index increased by only one point to -72.
Ms Leach said: “Staff numbers and investment prospects have fallen sharply to levels close to those seen during the pandemic. Income prospects have also fallen, although they are doing better on other indicators. Crucially, leaders’ confidence in their own organizations has also fallen, a sign that the Budget has weakened sentiment not only about the UK economy but the ability of firms to grow in it.”
The OBR predicts UK growth will be just 1.5 per cent this year.
In the documents published with the budget, predictions for next year and the next three years were also reduced.
The watchdog also warned that the Budget contained no measures that would have a “material impact” on growth but provided a £26bn increase in taxes.
In his speech on Monday, Sir Keir will admit the government needs to move “faster and faster” on growth.
He will champion the Budget to tackle the cost of living, create more ‘headroom’ and protect investment and public services.
“Economic growth is above forecasts,” he said, adding that ministers must “go further” to encourage it.
It will also approve reforms to the construction of nuclear power stations after the nuclear regulatory working group found that “pointless gold-plating, unnecessary bureaucracy and well-intentioned but fundamentally misguided environmental regulations have made Britain the most expensive place to build nuclear power”.
“We need to fix this urgently,” the Labor leader will say.
Economy Minister Peter Kyle will be tasked with applying the same deregulatory approach to major infrastructure plans to boost growth.
