More than three quarters of business leaders have “low” or “very low” confidence in the current UK business environment as Rachel Reeves’s plan to grow the economy struggles. The Chancellor’s decision to increase the tax on jobs is a major concern, with businesses also worried about the high cost of energy.
The new Business Confidence Survey by the Adam Smith Institute was published as attention turns to a report on the public finances to be presented to Rachel Reeves on March 26, which will be followed by an autumn statement on June 11 when Ms Reeves is expected to announce spending cuts. The survey found 77% of respondents reported “low” or “very low” confidence in the UK’s business environment. Just 4% had “high” or “very high” confidence.
Business leaders cited “taxation on profits”, “price and wage inflation”, and “high energy and input costs” as their top three major issues; They also outlined a wide variety of concerns about the UK’s business environment, which focused on high tax and energy costs, and burdensome red tape.
Andrew Griffith, the Shadow Business and Trade Secretary, highlights in his foreword that “businesses have been ringing the alarm bells for months – to little or no avail.”
The Adam Smith Institute is calling on the government to address businesses’ concerns by scrapping the increase in employers’ National Insurance and shelving the Employment Rights Bill in the short term, and reforming burdensome taxes, regulation and planning policies in the longer term.
As respondents to the survey highlighted, the UK is still in many ways an attractive place to do business due to its global reputation, quality of higher education, and innovative workforce and entrepreneurs. But the government must listen to businesses’ frustrations and address them with substantive policy changes, the think tank said. In the short term, it should scrap the hike in employers’ National Insurance and pause the Employment Rights Bill.
In the longer term, the Adam Smith Institute has published a number of proposals which would allow businesses to expand, boosting wages, employment and growth in the process. This includes reforming burdensome planning and licensing rules for hospitality venues, abolishing stamp duty, introducing an Italian-style flat fee to encourage wealth creators to remain in the UK, scrapping social metrics in government procurement to allow smaller companies to offer better value for taxpayers, and reforming third-party litigation funding rules, subjecting it to the same rules and regulations as other investment products.
Andrew Griffith, Shadow Secretary of State for Business and Trade, said: “The results from this Adam Smith Institute survey may be shocking, but they’ll come as no surprise to anyone who actually understands how business works.
“Fresh from a summer of trash-talking the economy and driving down consumer and business confidence, the Government’s Budget of Broken Promises is now taxing and regulating business into oblivion.
“It’s not too late for Rachel Reeves to admit her mistake and backtrack on her damaging National Insurance contributions hike and shelve the anti-growth Employment Rights Bill before more businesses are driven to the wall.”
