Separate major studies from the British Chambers of Commerce and the Federation of Small Businesses have delivered a damning indictment of the Labour government's policies on employment and tax.
The British Chambers of Commerce's (BCC) latest Quarterly Economic Survey (QES), the largest poll of business sentiment since October's Budget announcement, has revealed a concerns surrounding tax, not least national insurance tax contributions, has spiked.
The survey reveals 63% of firms cited it as a worry compared to 48% in Q3 while concerns about inflation and interest rates remained at similar levels to Q3.
Business confidence levels dipped significantly with just 49% of responding companies indicating they expected turnover to increase over the next year, down from 56% in Q3, with retail (39%) and hospitality (42%) the lowest.
Shevaun Haviland, director general
of the British Chambers of Commerce, said: “The worrying reverberations of the Budget are
clear to see in our survey data. Businesses confidence has slumped in a
pressure cooker of rising costs and taxes.
“Firms of all shapes and sizes are telling us
the national insurance hike is particularly damaging. Businesses are already
cutting back on investment and say they will have to put up prices in the
coming months.
“The Government is rightly coming up with
long-term strategies on industry, infrastructure and trade. But those plans
won’t help businesses struggling now.
“Business stands ready to work in partnership
to make the proposed Employment Rights legislation work for all, but the
current plans will add further costs on firms.
“To help business we need to see quick action
in three specific areas. Firstly, ministers should accelerate business
rate reform to create a system that incentives investment.
“We also need the Government to speed up
infrastructure investment, to help SMEs in supply chains across the country.
Finally, it’s crucial to support exports, prioritising a better trading
deal with the European Union.
“Without urgent Government action to ease the
pain on businesses, the challenging economic landscape will get worse before it
gets better.”
Meanwhile, research from the Federation of Small Businesses (FSB) has warned Labour's employment plan will negatively impact jobs, locking people out of work and sending the country's benefits bill spiralling.
FSB data shows 92% of small businesses are worries about the Employment RIghts Bill, with 67% saying they plan to recruit fewer staff and 32% saying they will cut roles.
And with companies less inclined to hire those out of work, or with a poor work history, it could leave benefits bills mounting up.
Among the key changes, in the Employment Rights Bill are ones to unfair dismissal legislation, which would expand the grounds for employees to take their new employer to a tribunal from their first day in the job.
Tina McKenzie, FSB’s policy chair, said: “Small firms have made it crystal clear that the Bill will not motivate them to hire more whatsoever. Their feedback is emphatic, resounding, and overwhelming.
“Ministers must show they get the risk to jobs and avoid a cavalier, dogmatic or patronising approach to the loud and clear feedback from small businesses. The economy is in no fit state for a ‘war on work’.
“If employers fear they will be sued, fewer will hire – with knock-on effects including a rising benefits bill and a lasting drag on living standards across the UK.
“These changes would have a severe negative impact on the real economy. All those who will be locked out of work as a result of this Bill deserve better from the government.
“Removing new rules on day one dismissal processes from the Bill altogether, and returning to the one-year qualification period in place under the last Labour government, is a more balanced approach and a cost-free route for the PM to show he gets it on the importance of creating and sustaining jobs.”