Business confidence in the UK has reached its lowest point in a year as fears mount over the upcoming Autumn Budget.
- The Institute of Chartered Accountants reveals a significant drop in confidence from 16.7 in Q2 to 14.4 in Q3 2024.
- Lloyds Bank reports similar trends, with business confidence at its lowest in three months, despite optimism about individual trading prospects.
- SMEs are particularly concerned, with 78% fearing post-budget fiscal challenges, especially potential tax hikes.
- Resource-intensive sectors such as energy and mining feel vulnerable due to expected tax regime changes.
Recent data indicates a notable decline in UK business confidence as the Autumn Budget approaches, raising concerns across various economic sectors. The Institute of Chartered Accountants in England and Wales (ICAEW) highlights a drop in business confidence from 16.7 in the second quarter to 14.4 in the third quarter of 2024. This downturn reflects apprehensions over slow business growth and an uncertain economic outlook, which have been exacerbated by Prime Minister Sir Keir Starmer’s warnings of a ‘painful’ budget.
The Lloyds Bank Business Barometer reveals that September saw business confidence fall to its lowest level in three months, standing at 47%. While companies remain hopeful about their trading prospects, there is a growing unease about the general economic direction of the UK. This suggests a disconnect between confidence in individual business operations and the broader economic landscape.
Prism’s forthcoming SME Barometer outlines critical concerns among small and medium-sized enterprises. A significant 75% of SMEs indicate that political uncertainty could detrimentally affect their operations, while 78% worry about fiscal challenges following the budget, primarily regarding tax increases. The tax burden is increasingly viewed as a key obstacle to growth, with 29% of businesses citing it as a major concern. This anxiety spans multiple sectors, including energy, water, mining, property, and retail.
The anticipated fiscal measures pose varying levels of concern across industries, with resource-intensive sectors like energy and mining appearing particularly susceptible to tax regime changes. These sectors rely heavily on stable fiscal conditions due to their high fixed costs. Property and retail businesses also anticipate potential increases in operating expenses as they prepare for possible tax hikes or regulatory shifts.
The recent decline in business confidence is particularly noteworthy given the relative stability observed over the past year. This shift occurs at a pivotal time for the UK economy, which faces sustained challenges such as inflation, labour shortages, and rising energy costs. The Autumn Budget is seen as a critical juncture that may either bolster or further undermine business confidence, depending on the policies introduced.
The upcoming Autumn Budget presents a crucial test for UK economic stability, with businesses anxiously awaiting fiscal policies that could impact their future direction.
