Business sentiment sours as firms brace for tax hikes
Business sentiment slumped in September as firms were braced for a fresh round of tax hikes in the autumn Budget.
Private sector confidence slipped from 54 per cent to 42 per cent, according to the Lloyds Business Barometer survey, data which is typically seen as more cheery than rival surveys.
Economic optimism edged down for the second time since April, with a fall of 11 points to 33 per cent. Trading prospects fell by 12 points to 51 per cent, while manufacturing saw a decline in confidence of 31 points to 31 per cent, a two-year low. Retail sentiment fell 17 points to 40 per cent, its lowest level in four months.
The data underscores the uncertainty felt by many businesses as chancellor Rachel Reeves draws up plans to raise tens of billions of pounds in extra taxes to stick within her fiscal rules.
Andrew Griffith MP, Shadow Business and Trade Secretary, said: “This survey was the final straw that Labour Ministers had to clutch.
“Even though it was always an outlier, the PM quoted it emphatically to rebut claims that business confidence is on the floor. Now that it’s crashed, will he admit his government’s failure?”
But Hann-Ju Ho, Senior Economist at Lloyds Bank Commercial Banking, said business sentiment remained higher than it had been in previous years.
“While increased market volatility earlier in the month may have impacted confidence, levels of trading prospects and economic optimism remain above their long-term averages,” Ho said.
“Businesses may find reassurance that the Bank of England is expected to reduce interest rates further in the next six months, while long-term global bond yields have calmed which, if sustained, may have a positive impact on businesses as we move into the last few months of the year.”