UK business confidence drops due to tax worries – Investing.com

In the UK, business confidence is falling as companies become more concerned about the potential tax implications of the upcoming Autumn Budget, according to research by the British Chambers of Commerce (BCC). The survey, which collected responses from 5,152 companies between August 19 and September 16, found that 48% of these companies cited taxation as a primary concern, a significant increase from 36% in the previous survey.

David Barrier, head of research at the BCC, said businesses are anxious about the direction of economic policy, with taxation at the forefront of their concerns. Escalating conflicts in the Middle East are also contributing to weak business sentiment.

UK Finance Minister Rachel Reeves has indicated that some taxes may increase in the budget scheduled for October 30. Reeves is also expected to review the government’s financial rules on public debt, which would allow for increased borrowing aimed at stimulating investment and economic growth.

The BCC’s findings showed a slight drop in companies’ earnings expectations for the next 12 months, with 56% expecting an increase, down from 58% in the second quarter. Furthermore, most companies no longer expect profits to grow, and investment levels have been described as the “Achilles heel” of the UK economy. Despite low interest rates and falling inflation, most small and medium enterprises (SMEs) are reluctant to invest.

The release of the research comes at a time when UK government debt has reached 100% of economic output since the early 1960s, following its first interest rate cut in more than four years last August and the suspension in September of borrowing costs at its next meeting in November.

Reuters contributed to this article.

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