A leading UK accountancy body has issued a stark warning that the government's Autumn Budget has severely damaged business sentiment, with a majority of firms now anticipating price rises, job cuts, and reduced investment.
Business Confidence Plummets Post-Budget
Exclusive data shared with City AM by the Institute of Chartered Accountants in England and Wales (ICAEW) paints a bleak picture. The survey of its over 140,000 members found that more than 70 per cent of respondents believe Chancellor Rachel Reeves's Budget will negatively affect their business. The feeling is particularly acute within accountancy practices themselves, where 22 per cent foresee a "very negative" effect.
Immediate Consequences: Prices, Jobs, and Investment
The perceived fallout from the Budget decisions is expected to be swift and tangible. According to the ICAEW findings:
- Over a third of all surveyed members expect to increase prices.
- This figure rises to nearly half for those working directly in accountancy practices.
- Nearly 40 per cent anticipate a reduction in their workforce.
- A further 30 per cent forecast a cutback in business investment.
This aligns with a warning the body issued in October, which stated that more than half of businesses would freeze hiring or cut staff if taxes were increased.
Calls for Government Action to Restore Confidence
In response to the crisis in confidence, the ICAEW has urged the government to adopt a clear pro-growth strategy. Iain Wright, the body's chief policy and communications officer, criticised the Budget's missed opportunity. "For a government whose number one ambition is economic growth, and a Chancellor who certainly had the opportunity to go for growth, this was not the Budget to deliver a much-needed confidence boost to UK plc," he stated.
The institute has presented a list of recommendations to unlock growth, headlined by a call to consult on simplifying the VAT system. They describe the current regime as overly complex, creating costly disputes and acting as a "hidden tax on innovation and growth" due to its threshold cliff edges.
Furthermore, advisors have told the government to avoid any further increases in business taxes during this Parliament to provide certainty. "Our members consistently tell us doing business is too expensive, too difficult and too uncertain. Unless the Government signals a clear change of course, it will struggle to deliver the conditions for growth the UK needs," Wright added.
The survey results compound worries about the UK's economic outlook, coming just a day after a separate report indicated business confidence had fallen to post-pandemic lows.
