Business Leaders Bracing for Impact as Tax Hikes Loom in Upcoming Budget

Shares fell on the London Stock Exchange as business leaders expressed growing unease ahead of Chancellor Rachel Reeves' second Budget, set to be delivered in the coming days. The Budget is expected to bring further tax hikes, which will likely have a significant impact on the economy. According to research firm Capital Economics, the Budget is likely to knock 0.2 off GDP in 2026, a meaningful hit to an economy that only grew 0.1 in the third quarter of this year. This estimate suggests that the Budget will have a lasting impact on the economy, with potential consequences for businesses and consumers alike. Business leaders are still reeling from the 25 billion National Insurance increase and an inflation-busting rise in the minimum wage, introduced in the previous Budget. Confidence in boardrooms has grown increasingly fragile as the Budget nears, with almost all measures of sentiment among chief executives and finance bosses in the last six months showing alarm bells ringing. "We are certain taxes will rise, and that takes money out of the economy," said a senior government adviser, who wished to remain anonymous. "This will have a significant impact on businesses, particularly those that are already struggling to stay afloat." However, as the chancellor pulls money out of the economy, the Bank of England is likely to push money back in by lowering interest rates, encouraging people and businesses to borrow and spend. This could potentially mitigate some of the negative effects of the Budget, but it remains to be seen how effective this will be. Business leaders are also concerned about the potential impact of the Budget on their bottom line. "We are already seeing the effects of the previous Budget, and we are worried about what this one will bring," said a spokesperson for the Confederation of British Industry. "We urge the government to consider the impact of its policies on businesses and to take a more balanced approach." The Budget is expected to be delivered in the coming days, and businesses are bracing themselves for the worst. With the economy already showing signs of weakness, the Budget is likely to have a significant impact on the country's economic prospects. In the lead-up to the Budget, the pound has fallen to a 14-month low against the dollar, and the FTSE 100 has fallen by 2.5% in the past week. This suggests that investors are already pricing in a negative outcome from the Budget. As the Budget nears, business leaders are holding their breath, waiting to see what the chancellor will announce. With the economy already fragile, the Budget is likely to have a lasting impact on the country's economic prospects.