Three quarters of business leaders have low confidence in the economy

A Business Confidence Survey by the Adam Smith Institute (ASI) has revealed that over 77% of business leaders in the UK have “low” or “very low” confidence in the current economic climate. The data showed that only 3.8% of respondents had ‘high or very high confidence.’

The average ‘Business Confidence Score’ across the survey was just 2.6 out of 10 with the single greatest issue was ‘taxation on profits,’ with 75% respondents citing this as a major concern;

‘Price and Wage inflation’ (71%) and  high energy and input costs (64%) were the second and third most cited with 59% also listed ‘high level of taxation on outputs’ such as VAT and duties and 45% also raised concerns about regulation.

A considerable number of medium to large businesses cited the threat of lawfare as a problem facing their company. As the ASI’s recent Judge Dread report highlighted, the UK’s class-action explosion is undermining confidence in the UK’s business landscape at a time when our country desperately needs more investment

Business leaders raised a wide variety of concerns about the UK’s business environment, which focused on growth-restricting red tape and on high energy costs and taxation. The decision to lower the threshold and hike the rates of National Insurance in particular was frequently mentioned.

As respondents to the survey highlighted, the UK is still in many ways an attractive place to do business due to its global reputation, quality of higher education, and innovative workforce and entrepreneurs.

The Government has been encouraged to listen to businesses’ frustrations and address them with substantive policy changes. In the short term, it should scrap the hike in employers’ National Insurance and pause the Employment Rights Bill. 

In the longer term, the Adam Smith Institute has published a number of proposals which would allow businesses to expand, boosting wages, employment and growth in the process. This includes reforming burdensome planning and licensing rules for hospitality venues, abolishing stamp duty, introducing an Italian-style flat fee to encourage wealth creators to remain in the UK, scrapping social metrics in government procurement to allow smaller companies to offer better value for taxpayers, and reforming third-party litigation funding rules, subjecting it to the same rules and regulations as other investment products.

Andrew Griffith, Member of Parliament for Arundel and South Downs and Shadow Secretary of State for Business and Trade, said “The results from this Adam Smith Institute survey may be shocking, but they’ll come as no surprise to anyone who actually understands how business works. 

“Fresh from a summer of trash-talking the economy and driving down consumer and business confidence, the Government’s Budget of Broken Promises is now taxing and regulating business into oblivion. 

I”t’s not too late for Rachel Reeves to admit her mistake and backtrack on her damaging NICs hike and shelve the anti-growth Employment Rights Bill before more businesses are driven to the wall.”

Sam Bidwell, Director of Research at the Adam Smith Institute, said “Our Business Confidence Survey paints a stark picture – businesses are losing confidence in the UK at a time when the country desperately needs growth, investment, and innovation.

“The Government has said that growth is their number one mission- but it’s impossible to achieve this without a booming private sector. It is the business owners and the entrepreneurs who create wealth and prosperity, not bureaucrats in Whitehall.

“The UK could easily be a fantastic place to do business- we have world class universities, an internationally recognised financial sector and innovative enterprisers. But the message to the Government from these business leaders is clear: to grow, they need lower taxes, simple regulation and an economic model which rewards risk. The Chancellor could start to make this a reality today by scrapping the anti-business hike to Employers’ National Insurance, while also taking steps to reform planning, regulation, and our litigation funding model.”