LONDON, Dec 1 (Reuters) – The British Institute of Directors said on Sunday that optimism amongst its members had fallen to its lowest level since the outbreak of the Covid-19 pandemic following a tax rise in Finance Minister Rachel Reeves’ first budget on Oct. 30.
Investment plans and hiring intentions were the weakest since May 2020 last month, while business leaders’ optimism index fell to the lowest since April 2020 at -65, down from -52 in October.
“As businesses continue to feel the impact of the Budget on their business plans, confidence continues to decline,” said Anna Leach, IoD chief economist.
“The budget not only repairs the foundations, it undermines them, harming the private sector’s ability to invest in its businesses and its workforce,” she added.
The IoD report adds to numerous complaints from businesses about the budget and other signs of economic slowdown.
Last week, Reeves promised the Confederation of British Industry that she would “not come back with more borrowing or more taxes” in future budgets.
Reeves announced tax increases of 40 billion kilos ($51 billion) in the budget, including a 25 billion pound increase in annual social security contributions paid by employers.
Labor only pointed to around £8 billion in tax increases ahead of the election, with Reeves blaming the additional increases largely on what she said was an unexpectedly weak fiscal legacy left by the previous Conservative government.
The IoD said the planned tightening of labor law could also increase costs for employers.
The IoD survey took place between 15 and 27 November and was based on 601 responses, mainly from small businesses. ($1 = 0.7851 kilos) (Reporting by David Milliken; Editing by Toby Chopra)
