Business confidence remained at "rock bottom" in October as Budget speculation rattled executives' nerves amid concerns over increasing costs and stagnating growth, according to a leading industry body's survey.
Rachel Reeves has publicly stated that tax rises are being considered in this year's Budget, whilst speculation has suggested major corporations could face new capital gains tax regulations, increased levies and reductions to consumers' disposable income.
The Institute of Directors' (IoD) most recent survey has revealed the impact tax speculation is having on bosses' growth forecasts.
It demonstrated that the rating for business confidence in the º£½ÇÊÓƵ economy over the next 12 months stood at -73, a one point increase from September, which represented the lowest figure on record.
Directors' confidence in their own companies reached a neutral score of 0 as it climbed marginally from the previous month, as reported by .
However, business leaders were broadly pessimistic about their future outlook.
The survey demonstrated that headcount projections and investment plans stayed in negative territory despite marginally improved readings in October.
Revenue forecasts edged into positive territory at a net balance of 13, whilst export projections improved by two points.
The survey also demonstrated that cost projections remained high, indicating that firms are still grappling with elevated energy bills and persistent inflation levels.
"Business confidence remained at rock bottom in October, as businesses expect the worst from the Autumn Budget," said Anna Leach, chief economist at the IoD.
"Business leaders are worn out from the past year's roller coaster of uncertainty and tax increases. We hear repeatedly of the effects: planning horizons shortened, hiring cancelled or outsourced, and discretionary spend on hold. ".
"Businesses need certainty over their costs – both tax and regulatory."
The IoD has spearheaded demands for the Chancellor to increase income taxes at the Budget to plug a fiscal gap, with business leaders arguing the tax burden should be "spread more evenly across the economy".
It has also united with other industry bodies in urging the government to reconsider elements of the Employment Rights Bill, given Labour's pledge to slash the regulatory burden on businesses by 25 per cent.
Speculation suggests the government is mulling a simultaneous rise in income taxes alongside a reduction in national insurance, which would mark a departure from manifesto pledges.
Industry organisations have also called on the government to prioritise improving training provision across the º£½ÇÊÓƵ and lowering energy costs to enhance growth prospects.
Business leaders have now submitted their Budget recommendations ahead of a recent deadline for proposals. Companies are now eagerly awaiting the government's strategy to fill a nearly £30bn fiscal gap without hindering Labour's growth objectives.
Shadow Chancellor Mel Stride said: "Business confidence has been shattered – not by global shocks, but by Labour's choices.
"Rachel Reeves promised the most pro-business Treasury ever. Instead, she's hit employers with a £25bn jobs tax, and now even more taxes are coming because she hasn't got a plan or the backbone to control spending."
