No more tax hikes! Rachel Reeves told ‘bruised’ business cannot take another ‘Budget battering’

Last night Rachel Reeves was warned that British business was ‘hurt’ and ‘the Budget cannot afford another hit’.

Confidence among employers remains at three-year lows as fears of a new tax rise grow, the British Chambers of Commerce (BCC) said in a scathing report.

Less than half of firms expect business to recover in the next 12 months as the economy continues to be hit by the £40bn extra tax announced in last year’s Budget.

This included a £25bn raid on national insurance premiums (NICs) paid by businesses; this increased the cost of employing staff; This led to job losses and higher prices.

The survey of more than 4,600 firms found that tax ‘remains the biggest concern for businesses’, with the Chancellor planning another punitive raid next month.

It is feared he could announce new tax rises worth £30bn to plug a gap in the exchequer as a faltering economy and wasteful government spending take its toll.

David Bharier, head of research at the British Chambers of Commerce, said: ‘Firms continue to be hurt and are not prepared for another budget hit.

‘Our message to the Chancellor ahead of the budget is clear: there will be no further tax increases on business.’

These comments echoed those of Tesco CEO Ken Murphy, who said last week: ‘Enough is enough.’

The BCC said confidence could deteriorate further and put economic growth at risk unless ‘urgent action’ is taken to revive business.

Shadow chancellor Sir Mel Stride said: ‘Another day, another report confirming what businesses already know: confidence in the economy is collapsing.

‘Business confidence has been shattered; ‘Not because of global uncertainty, but because of the deliberate choices Rachel Reeves made.’

A separate report by KPMG and the Recruitment and Employment Confederation (REC) showed demand for new staff had fallen as firms delayed hiring.

KPMG chief executive Jon Holt said: ‘With so little positive news about the economy in recent months and so much speculation about the Budget, it’s understandable that employers are cautious about hiring.’

Confidence among households is also falling as cautious shoppers worry the Budget will rein in spending, the British Retail Consortium (BRC) said.

‘Low consumer confidence ahead of the potential tax rise Budget kept many shoppers away in September,’ BRC chief executive Helen Dickinson said.

The BCC survey found that 59 per cent of companies now see tax as a concern; this rate was only 36 percent ahead of last year’s budget.

The report also found a “sharp increase in these concerns.” inflationThis is now identified as a concern by 57 percent of firms; This is the highest level since the beginning of 2024.

An increase in national insurance premiums paid by Ms Reeves’s business is thought to have caused inflation to rise as companies facing higher costs raise prices.

Inflation had fallen to 1.7 percent last October before the budget, but now stands at 3.8 percent; This is almost double the 2 percent target and the highest target in the G7.

Mr Bharier said: ‘For twelve months SMEs have told us the same story: rising costs, poor investment and little sense of relief on the horizon. The rise in employer NICs has been the most cited source of pressure hitting investment and driving up prices. The proportion of businesses expecting to increase prices remains alarmingly high, mainly due to labor costs. ‘Inflation now ranks alongside taxation as the biggest concern.’

He added: ‘Continued weak sentiment this quarter may suggest many firms are already pricing in a tough Budget. But further surprise measures affecting business, such as those seen in 2024, could further reduce confidence. ‘What businesses need now is certainty and a long-term strategy, not temporary policy changes.’

REC chief executive Neil Carberry called for a ‘pro-growth’ budget and reforms to Labour’s workers’ rights bill that would provide ‘an injection of confidence in the wider economy for jobs to move forward’.

He said: ‘The economic landscape remains challenging for employers with pressures beyond their control. Truly pro-business, pro-growth Autumn Budget Next month he can deliver much-needed relief by avoiding unaffordable tax rises on business, committing to genuine viability of the Employment Rights Bill, supporting flexible working and reforming public sector recruitment.’