Business confidence in the UK has plunged to its lowest point in a year as the Autumn Budget approaches.
- Prime Minister Sir Keir Starmer’s warning of a ‘painful’ budget has heightened business concerns.
- SMEs are particularly worried about potential tax hikes and fiscal challenges post-budget.
- The energy, water, mining, property, and retail sectors are most apprehensive about the looming fiscal changes.
- Despite some optimism in individual company performances, there is widespread concern about the broader economic direction.
Business confidence in the UK has recently reached a twelve-month low, casting a shadow over economic prospects as the government prepares to unveil the Autumn Budget. The latest insights reveal a fragile sentiment across various industries, reflecting deeper apprehensions about future fiscal policies.
Prime Minister Sir Keir Starmer has indicated that the forthcoming budget will likely contain challenging measures, exacerbating existing uncertainties among business leaders. The Institute of Chartered Accountants in England and Wales (ICAEW) reported a drop in business confidence from 16.7 in Q2 2024 to 14.4 in Q3, highlighting a significant decline in optimism as economic growth slows.
Small and medium-sized enterprises (SMEs) are expressing notable concern, with Prism’s SME Barometer data showing 75% believe political instability could adversely affect their operations. Furthermore, 78% of these businesses fear fiscal difficulties post-budget, particularly regarding potential tax increases. These worries underline the profound uncertainty enveloping the UK business landscape.
The sectors most affected by potential fiscal measures include energy, water, and mining, with 44% of related businesses citing tax burdens as a substantial growth barrier. Property sectors (38%) and retail and wholesale (32%) also share this fear, highlighting the uneven impact of potential policy shifts. Resource-intensive industries are especially vulnerable due to their dependency on stable fiscal conditions for sustained operations.
Despite individual companies’ optimism about their prospects, there is a diminishing confidence in the UK’s overall economic trajectory. The Lloyds Bank Business Barometer shows business confidence fell to 47% in September, marking a three-month low. This points to a dichotomy between self-assured corporate performance and broader economic scepticism.
The impending Autumn Budget serves as a crucial juncture, potentially reshaping business confidence and economic stability across the UK.
