New data reveals that months of speculation ahead of the Chancellor's Autumn Budget left British businesses feeling "in limbo", severely denting confidence and delaying crucial investment decisions.
Business Activity Plummets Amid Tax Fears
The Confederation of British Industry's (CBI) latest private sector survey, which collected data before the Budget, paints a stark picture. The composite measure for expected business activity over the next three months dropped to -27 in November, worsening from -20 in the two previous months.
Researchers directly linked this decline to mounting fears over potential tax rises, which weighed heavily on spending plans. This extends a run of negative readings that began in October last year – the month of Rachel Reeves' first Budget.
Alarmingly, the survey of around 900 companies indicated that current private sector activity had fallen at its fastest pace since August 2020, with every sub-sector reporting a drop in output.
Investment and Hiring Plans Put on Hold
CBI deputy chief economist Alpesh Paleja stated that the downturn in confidence could be attributed to "jitters" before the fiscal statement. He explained that businesses reported the month passed in a state of uncertainty, with "big discretionary spending and investment on hold".
This cautious sentiment persisted even after the Budget details were known. A separate poll by WPI Strategy, conducted after the announcement, found that 56 per cent of business leaders said they were likely to hire fewer people than previously planned as a result. A third believed their company would suffer under the new fiscal landscape.
Martin Beck, Chief Economist at WPI, said the findings "reinforce the sense that the Budget has done little or nothing to jump-start growth." He added that eight in ten businesses believed it would have either a negative or no impact on their operations.
Speculation Stunts Housing Market and Growth
The negative impact of pre-Budget rumours extended beyond corporate boardrooms. The Bank of England stated that tax speculation had stunted economic growth in the third quarter of the year.
Furthermore, the housing market felt the chill. The Bank revealed that net mortgage borrowing dropped to £4.3bn in October, while mortgage approvals declined to 65,000 – the lowest level since February 2025. Analyst Anthony Codling at RBC Capital Markets confirmed that the "long period of Budget speculation negatively impacted housing market activity".
The government has faced intense criticism over anonymous briefings to media outlets, which suggested the Chancellor faced a £30bn fiscal hole. This was despite the Office for Budget Responsibility revealing that Reeves' headroom – £21.7bn – had not been entirely wiped out after forecasts were shared with the Treasury on 20 October. Both Prime Minister Keir Starmer and Chancellor Reeves have denied misleading the public over the state of public finances.
