Optimism about the economy has been 'snuffed out' by fears of a tax-raising Budget next month and concern about Labour's plans for a union-friendly package of workers' rights.
Ministers have fuelled speculation about higher taxes on wealth and investment, including hikes to capital gains tax and inheritance tax. Financial advisers have reported a 'frenzy' among investors seeking to sell off assets ahead of a possible rise in taxes next month. Firms have also been spooked by Labour's 'New Deal for Working People', which will tear up anti-strike laws.
The IoD's monthly Economic Confidence Index was minus-14 in June as investment decisions were put on hold ahead of the election, but it recovered to a three-year high of plus-7 in July after the poll result. But the survey of business leaders fell back to minus-12 last month as the reality of Labour's agenda became clearer.
Tory business spokesman Kevin Hollinrake said: 'It's becoming increasingly clear that, Labour's tidal wave of workplace reforms and forthcoming tax rises are already denting business confidence in the UK' Sir Martin Sorrell, the City grandee and chief executive of marketing firm S4 Capital, acknowledged that ministers had 'very little wiggle room' in balancing the books.
'The reality is investors are not going to come here if you keep putting up taxes,' he said. 'If they put up capital gains tax, it will be such a short-sighted move. It will not bring in more money; in fact, money will fly from this country.' Sir Martin Sorrell , the City grandee and chief executive of marketing firm S4 Capital, acknowledged that ministers had 'very little wiggle room' in balancing the books
Under Labour's workers' rights agenda, which has been championed by Deputy Prime Minister Angela Rayner, staff will have the right to demand 'flexible working', including from home