Rachel Reeves has been warned that businesses face a “watershed moment” in next month’s Budget.
The British Chamber of Commerce (BCC) has urged the chancellor, who is expected to announce tax rises in November’s budget to plug the public finances deficit, to avoid increasing levies on businesses.
Ms. Reeves raised taxes by £40 billion last year and the BCC said business confidence had not recovered since.
“Last year’s budget took their breath away, and since then they have struggled to find momentum,” said BCC Director General Shevaun Haviland.
She said businesses were feeling “exhausted” and could not plan ahead as they expected “new tax requirements to be presented to them” when the budget is presented on November 26.
“The Chancellor must seize this opportunity and use her budget to implement a pro-growth agenda that can restore optimism and confidence among business leaders,” added Ms Haviland.
“This year’s budget will be a watershed moment for many businesses.”
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The BCC also called for a reform of professional rates and the removal of the exceptional tax on gas and oil introduced by the last government.
In its submission, the industry body made more than 60 recommendations, including proposing to invest more in infrastructure, reduce trade barriers and take steps to address the skills shortage.
Earlier this year, Prime Minister Sir Keir Starmer announced that Labor goal of approving 150 major infrastructure projects between now and the next election, with Labor already committed to supporting the expansion of Heathrow and Gatwick airports – another of the BCC’s demands.
Although the Treasury would not comment on budget speculation, a spokesperson insisted Ms Reeves would “strike the right balance” between ensuring funding for public services and ensuring economic growth.
She pledged to stick to Labor manifesto promises not to raise taxes on “working people”.
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Household spending down
The BCC’s call to halt further tax increases on businesses comes as retail sales growth slowed in September.
“With a big budget looming and households facing higher bills, retail spending has increased more slowly than in recent months,” said Helen Dickinson, chief executive of the British Retail Consortium (BRC).
“Rising inflation and a potentially demanding budget are weighing on the minds of many households planning their Christmas spending.”
Total UK retail sales rose 2.3% year-on-year in September, compared with growth of 2% in September 2024 and above the 12-month average growth of 2.1%, according to data from BRC and KPMG.
Although food sales increased by 4.3% year-on-year, this increase was largely explained by inflation rather than volume growth.
Non-food sales growth slowed to 0.7% from 1.7% last September, putting it below the 12-month average growth of 0.9%.
Total UK retail sales increased in September compared to the previous year. File photo: PA
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Online non-food sales rose just 1% compared to 3.4% growth last September, lower than the 12-month average growth of 1.8%.
“The future of many flagship department stores and thousands of jobs remains at risk while the Treasury keeps the risk of a new business rates surcharge on the table,” Ms Dickinson said.
“By exempting these stores during Budget announcements, the Chancellor can reduce inflationary pressures on businesses and households.”