Existential threat: Reeves at a media briefing in London. After last year’s budget, Reeves promised businesses she wouldn’t come back for more on tax, though she’s since watered down that pledge. — Reuters
LONDON: UK business chiefs urged Chancellor of the Exchequer Rachel Reeves to ease energy costs and avoid raising the tax burden on corporate Britain as she prepares this year’s budget.
After raising taxes by £40bil (US$53bil) in last year’s budget – a hit largely focused on businesses – Reeves is grappling with a swelling fiscal gap as she prepares to deliver her second set-piece on Nov 26.
The run-up has been dominated by speculation about how she’ll fill a shortfall expected to be between £20bil and £30bil.
“Right now, many firms feel drained,” said British Chamber of Commerce (BCC) director general Shevaun Haviland, calling the budget a “make-or-break moment” for businesses. “They cannot plan ahead as they expect further tax demands to be laid at their feet.”
Bloomberg combed through the budget submissions of the UK’s five main business lobbies: the BCC, the Confederation of British Industry (CBI), MakeUK, the Institute of Directors (IoD), and the Federation of Small Businesses (FSB).
Here are some of the issues they identify:
> Keep taxes down. All five lobby groups singled out tax as their most pressing concern, with firms hit by last year’s increase in employer national insurance contributions, a policy that businesses and opposition lawmakers say contributed to a rise in unemployment to 5% for the first time since the pandemic.
After last year’s budget, Reeves promised businesses she wouldn’t come back for more on tax, though she’s since watered down that pledge.
Both the CBI and IoD called on the government to break with its election pledges and raise broad-based taxes like income tax, rather than impose “death by a thousand taxes” on specific sectors of the UK economy.
The United Kingdom’s “ever-increasing regulation, litigation and tax will scar present and future generations who will keep finding the search for work incredibly painful,” FSB policy chair Tina McKenzie said.
> Energy costs. Bills for both businesses and consumers in Britain have risen as the country tries to fund infrastructure investment and a green transition. That’s left the United Kingdom with industrial energy costs greater than its European peers.
The power price poses an “existential threat” which could “deindustrialise the UK,” MakeUK chief executive officer Stephen Phipson said. The organisation wants the government to discount energy costs for heavy business users and introduce tax exemptions for companies that invest in energy efficient machinery.
> Workers’ rights. Business groups also took aim at legislation working its way through Parliament that aims to boost workers’ rights, arguing it will deter hiring even further. An IoD survey of 500 business leaders in October found the Employment Rights Bill is the top impediment to growth for organisations.
“The government’s manifesto commitments increasingly clash with its growth ambitions” says IoD chief economist Anna Leach, who also argued the government should avoid increasing the national living wage any further. — Bloomberg
