Disaster for Rachel Reeves as confidence in economy hits ‘rock bottom’ | Politics | News
Business leaders are facing misery as their confidence in Rachel Reeves’ Budget plans has plummeted, a new survey has revealed. As rumors grow that the Chancellor will announce a series of hikes affecting everything from income tax to pensions, the private sector is increasingly uneasy about the impact tax rises will have on the country’s spending power.
The Institute of Directors (IoD), which has nearly 20,000 members including individual directors and business leaders, said readings in its surveys of optimism about the economy remained at historic lows. The index remained at a dismal minus 73 in October; It is up only slightly from negative 74 in September. The confidence rating for Britain’s economic outlook was the lowest reading since the survey began nine years ago. The IoD survey also found that businesses’ expectations for hiring new staff remained negative at minus 2.
Anna Leach, the IoD’s chief economist, told the Telegraph: “Business confidence remained at its lowest level in October as businesses expected the worst from the autumn budget.”
Ms Leach told the newspaper: He said many companies had put key decisions on recruitment and investment “on hold” ahead of the Budget on November 26.
He added: “Policy uncertainty and rumors ahead of the budget are really leading to a lot of wait-and-see behavior.”
The Chancellor is reportedly trying to fill another black hole in the public finances after his record tax increase budget in 2024. The effects of Ms Reeves’ decisions have been keenly felt by businesses still counting the cost of the increase in employer National Insurance contributions.
Shadow chancellor Sir Mel Stride told the Telegraph: “Businesses are stalling on recruitment and investment because they don’t trust Labor to keep its promises.
“Rachel Reeves promised the most pro-business Treasury ever. Instead, she hit employers with a £25bn jobs tax – and now even more taxes are coming because she doesn’t have a plan or the backbone to control spending.
Ms Reeves is expected to raise taxes next month as she tries to fill the gap in spending plans thought to be worth more than £20bn. Last week Sir Keir Starmer refused to reiterate Labour’s commitment to its manifesto pledge not to increase income tax, national insurance or VAT.
A Treasury spokesman said: “We are a pro-business government that has delivered the fastest growth in the G7 since the start of the year, helped interest rates fall five times since the election and struck new trade deals with the US, EU and India – all helping to reduce business costs.
“We have also capped corporation tax at 25 per cent and are reshaping business rates.”
