British businesses are warning that they cannot absorb further tax increases, as the Confederation of British Industry (CBI) reports that confidence has remained negative for over a year. The organisation said uncertainty surrounding Chancellor Rachel Reeves’ forthcoming Budget has caused widespread hesitation among firms, with many delaying investment and hiring decisions.

According to the CBI’s October survey, sentiment among businesses has now been in decline for 13 consecutive months, stretching back to last year’s Budget when the Chancellor introduced a £25 billion rise in employer National Insurance contributions. This downturn, the group notes, has persisted even longer than the economic pessimism seen during the Covid-19 pandemic.

Private Sector Confidence Remains Fragile

CBI deputy economist Alpesh Paleja warned that firms are facing “a difficult winter” amid weak private sector momentum and fragile confidence. He added that the lack of clarity around fiscal policy is “weighing heavily on sentiment,” leaving businesses reluctant to commit to major decisions until the Budget is announced.
The organisation expects business activity to contract over the next three months, with many leaders bracing for additional tax rises as the government seeks to address a reported £50 billion shortfall in the public finances.

Industry Leaders Call for Policy Reversal

Concerns over the UK’s economic outlook are echoed by Helm, a network for scale-up business founders, which reported that 75 per cent of its members have paused recruitment or investment plans pending the Budget. Helm chief Andreas Adamides described the findings as “a flashing red light on the UK’s economic dashboard.”

Prominent business figures have also urged the Chancellor to rethink her approach. Marks & Spencer chief executive Stuart Machin called on Reeves to “change course” to avoid what he described as an “economic doom loop” of higher taxes and lower growth. His predecessor, Lord Stuart Rose, went further, warning that Labour’s fiscal policies risk pushing Britain “to the edge of a crisis.”

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