British business confidence falls amid tax worries
written by Bella Palmer
The ICAEW said on Wednesday that its quarterly Business Confidence Monitor dropped to 14.4 in the three months to September, the first decline in a year and down from 16.7 in the previous quarter
British business confidence fell in the third quarter as tax worries hit investment, according to a survey of accountants that echoes similar concerns from other business groups before the new Labour government's first budget.
The Institute of Chartered Accountants in England and Wales (ICAEW) said on Wednesday that its quarterly Business Confidence Monitor dropped to 14.4 in the three months to September, the first decline in a year and down from 16.7 in the previous quarter.
The findings show that businesses are troubled by the tax burden and increasingly reluctant to invest, ICAEW chief executive Alan Vallance said.
Finance minister Rachel Reeves has warned that taxes will probably have to go up in her October 30 budget after she said she had uncovered a £22 billion hole left in this year's public finances by the previous Conservative government.
The ICAEW said 29% of companies cited the tax burden as a growing challenge, the joint highest in the survey since it started in 2004 and well above the average figure of 16%.
A separate survey from the British Chambers of Commerce on Tuesday also showed a decline in business morale due to concern about the impact of the budget on tax levels.
The government has ruled out increases to the rates of income tax, corporation tax, value-added tax and National Insurance social security payments. But the ICAEW said businesses were concerned about other tax hikes including hiking capital gains tax.
Businesses have already slightly scaled back plans to increase investment. Firms in the ICAEW survey said they planned to increase investment by 1.9% over the next 12 months, down from 2.1% before.
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