As published on msn.com, Monday 27 February, 2023.
Jeremy Hunt’s tax raid poses one of the biggest threats to UK businesses this year, according to a survey of British bosses that urged the Chancellor to make restoring competitiveness a “priority” for the Budget.
Business leaders said reducing the tax burden on companies and their staff were two of their top three policy priorities this year.
Energy support was also one of the most important issues for businesses, according to Boston Consulting Group’s survey of 1,500 British business leaders.
A quarter of company bosses surveyed also said higher taxes posed one of the biggest threats to doing business, while 40pc said they were still struggling with energy costs.
Companies and workers across the UK face paying higher taxes from April, as corporation tax rises from 19pc to 25pc, investment incentives are removed and employees are forced to hand more of their pay to the taxman as tax-free thresholds are frozen until 2028.
Inflation also remains stubbornly high, at above 10pc, although most economists expect the rate of price growth to fall sharply this year.
Raoul Ruparel, director of BCG’s Centre for Growth and a former government adviser, said businesses were looking for some relief from the Chancellor to boost confidence and raise the chance of the UK avoiding recession.
“A lot of businesses I speak to feel like they're getting squeezed from all sides,” he said. “And I think that is part of what comes through in the findings which links back to the tax environment, and what the Government can do to ease that pressure on their margins.”
It came as new research from EY found that the cost of living pressures will intensify the UK’s regional divide, stoking pressure on the Government’s levelling up agenda.
While the consultancy predicts the UK as a whole will see a 0.6pc drop in growth this year, the hit to the capital’s economy will be much gentler at 0.2pc.
Meanwhile, regions like Yorkshire and the Humber and the East Midlands are expected to suffer the steepest drops at 1pc each.
The fall is driven by the services most dependent on household spending such as retail, hospitality and entertainment.
London’s strong financial services and other knowledge-based sectors provide a buffer against the worst of the blow, according to the research.
Rohan Malik, EY’s UK&I Managing Partner Markets & Accounts, said: “Levelling-up presents an opportunity to boost growth for the whole of the UK – but familiar patterns are still all too present as the economy recovers from the pandemic.”
Londoners and those in the South East are more resilient in the face of rampant inflation as their earnings are significantly higher than the national average, the report also highlighted.