The latest survey from the Institute of Chartered Accountants in England and Wales (ICAEW) reveals a dip in business confidence.
- Confidence has fallen from 16.7 to 14.4, mainly driven by anxiety over potential tax increases in the upcoming budget.
- A significant 29% of respondents have identified the tax burden as a principal concern.
- Despite easing inflationary pressures, businesses are hesitant to invest amidst speculations of tax hikes.
- Industry leaders call for stability and reforms to support economic growth as the budget announcement looms.
According to the latest findings from the ICAEW, business confidence has seen a decline from 16.7 in the second quarter to 14.4 in the third quarter of this year. A survey encompassing 1,000 professional advisers highlighted that 29% of respondents view the ‘tax burden’ as a primary concern, coinciding with rising speculations surrounding potential tax increments aimed at bolstering public finances.
The decline in confidence has surfaced despite an overall easing in inflationary pressures. Alan Vallance, CEO of ICAEW, emphasised that the business sector’s hesitancy to invest stems from uncertainties about upcoming financial policies. “The findings show that businesses are troubled by the tax burden and increasingly reluctant to invest,” he stated.
Significant concerns have been raised even as domestic sales growth reaches an annual peak and wage growth decelerates to 3.6%, the lowest in over two years. Meanwhile, export growth has diminished to 2.7%, marking the poorest performance so far this year. Despite a slight rise in domestic sales, businesses remain cautious due to potential budget-driven challenges.
Suren Thiru, economics director at ICAEW noted that the current figures deliver a “slight reality check” for the UK economy. He commented that “weaker expected export and investment activity, alongside fears of a painful budget, dented business confidence”. Concerns persist even as the broader market shows hints of growth.
As the impending budget draws closer, business leaders urge the government to implement essential reforms, such as adjustments to VAT and business rates, while advocating for enhanced public and private investments. Such measures are seen as crucial for fostering long-term economic stability and prosperity.
Overall, while easing inflationary pressures offer a slight reprieve, looming tax hikes and policy uncertainties continue to challenge business confidence and economic growth.
