UK Business Confidence Plunges to Post-Mini-Budget Low Amid Tax Concerns

Confidence among U.K. firms has tumbled to its lowest level since the market-rocking 'mini-budget' crisis of fall 2022, according to a survey by the British Chambers of Commerce. The trade group said sentiment had declined significantly in its largest poll since the Labour government's debut budget last October, which included a hike in the amount many employers pay out in National Insurance (NI), a tax on earnings.

The BCC cited firms in hospitality, manufacturing, construction and health-care expressing worries about how they would cover additional costs and saying they would likely scale back investment. UK firms are planning to raise prices to cover higher tax payouts as confidence among businesses tumbled to its lowest level since the market-rocking 'mini-budget' crisis of fall 2022. The BCC said 63% of businesses cited tax as a worry in the survey, up from 48% in the third quarter. More than half (55%) said they expect prices to go up in the next three months, primarily due to higher labor costs. The percentage of companies saying they expected turnover to increase in the next twelve months fell to 49%, from 56%. Concerns about the tax hike were most prominent among firms in hospitality, manufacturing, construction and healthcare, which expressed worries about covering additional costs and said they would likely scale back investment. The government argues tax rises were necessary to plug a major shortfall in the public finances left by the previous administration. It has also previously stated that more than half of U.K. employers will either experience a cut or no change in their national insurance bills due to exemptions. 'We recognize what she said, that she's got to increase taxes to fill her black hole, but what we need to see her do now is mitigate against that. What are we going to do to drive the economy?' Shevaun Haviland, head of the BCC, told CNBC's 'Squawk Box Europe' on Monday. 'Businesses are going to have to shoulder this tax increase, but what we want to see her do is act, and they need to act quickly.

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