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The chancellor's controversial Budget is being blamed for a sharp drop in business confidence levels amid a warning the economy could shrink.

The index, put together by consultancy BDO, monitors the confidence levels among British businesses - and fell 5.8 points over the last month to 93.5.

That's the lowest level since January 2023.

A similar tracker on economic output also dropped to its lowest level since October of last year, The Times reports.

Paul Dales, chief UK economist at Capital Economics, said: “With the economy having grown at the snail’s pace of just 0.1% in the third quarter, such falls in business confidence increase the risk that the economy will contract in the fourth quarter. That would be a ‘milestone’ that the government could do without.”

The data is compounded by Recruitment and Employment Confederation figures showing a steep drop in job vacancies and a rise in redundancies since the Budget was announced on October 30.

A Treasury spokesman told The Times: “With our public services crumbling and an inherited £22billion fiscal black hole, we had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability. By doing this, more than half of employers will either see a cut or no change in their national insurance bills, there will be £22.6billion more for the NHS and workers’ payslips will be protected from higher tax."

FTSE 100

The UK's flagship share index, the FTSE 100, was down 19 points at 8,333 shortly after opening this morning.

Brent crude oil futures were up 1.06%, trading at $71.75 a barrel.

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