Business Crisis of Confidence in the UK
Over three quarters of business leaders surveyed have ‘low’ or ‘very low’ confidence in the current UK business environment;
This is according to a new Business Confidence Survey by the Adam Smith Institute (ASI), which asked for the views of almost 200 business leaders from a wide variety of sectors;
77% of respondents reported ‘low or very low confidence in the UK’s business environment. Just 4% had ‘high’ or ‘very high’ confidence;
Business leaders cited ‘taxation on profits,’ ‘price and wage inflation,’ and’ high energy and input costs’ as their top 3 major issues;
They also outlined a wide variety of concerns about the UK’s business environment, which focused on high tax and energy costs, and burdensome red tape. The decision to hike the rates of National employer’s National Insurance while lowering the threshold was frequently highlighted;
For a considerable number of medium-to-large businesses, the threat of lawfare was a particular concern, with 1-in-10 businesses actively worried about legal action in the short-term;
Andrew Griffith, the Shadow Business and Trade Secretary, highlights in his foreword that “businesses have been ringing the alarm bells for months - to little or no avail.”
Restoring business confidence in the UK is vital for boosting growth, wages and living standards;
The ASI is calling on the government to address businesses’ concerns by scrapping the increase in employers’ National Insurance and shelving the Employment Rights Bill in the short term, and reforming burdensome taxes, regulation and planning policies in the longer term.
The Adam Smith Institute has conducted a survey of nearly 200 business leaders from a wide variety of sectors including financial services, hospitality, and tech and manufacturing, and which collectively represent approximately 100,000 employees across the country.
This survey illustrates the strikingly low levels of private sector confidence in the Government’s economic policies:
77% of those surveyed reported ‘low or very low confidence’ in the UK’s business environment. Only 3.8% of respondents had ‘high or very high confidence.’
The average ‘Business Confidence Score’ across the survey was just 2.6 out of 10.
The single greatest issue was ‘taxation on profits,’ with 75% respondents citing this as a major concern;
‘Price and Wage inflation’ (71%) and high energy and input costs (64%) were the second and third most cited;
59% also listed ‘high level of taxation on outputs’ such as VAT and duties;
45% also raised concerns about regulation.
A considerable number of medium to large businesses cited the threat of lawfare as a problem facing their company. As the ASI’s recent Judge Dread report highlighted, the UK’s class-action explosion is undermining confidence in the UK’s business landscape at a time when our country desperately needs more investment
Business leaders raised a wide variety of concerns about the UK’s business environment, which focused on growth-restricting red tape and on high energy costs and taxation. The decision to lower the threshold and hike the rates of National Insurance in particular was frequently mentioned.
As respondents to the survey highlighted, the UK is still in many ways an attractive place to do business due to its global reputation, quality of higher education, and innovative workforce and entrepreneurs.
But the government must listen to businesses’ frustrations and address them with substantive policy changes. In the short term, it should scrap the hike in employers’ National Insurance and pause the Employment Rights Bill.
In the longer term, the Adam Smith Institute has published a number of proposals which would allow businesses to expand, boosting wages, employment and growth in the process. This includes reforming burdensome planning and licensing rules for hospitality venues, abolishing stamp duty, introducing an Italian-style flat fee to encourage wealth creators to remain in the UK, scrapping social metrics in government procurement to allow smaller companies to offer better value for taxpayers, and reforming third-party litigation funding rules, subjecting it to the same rules and regulations as other investment products.
Andrew Griffith, Member of Parliament for Arundel and South Downs and Shadow Secretary of State for Business and Trade, said:
“The results from this Adam Smith Institute survey may be shocking, but they’ll come as no surprise to anyone who actually understands how business works.
Fresh from a summer of trash-talking the economy and driving down consumer and business confidence, the Government’s Budget of Broken Promises is now taxing and regulating business into oblivion.
It’s not too late for Rachel Reeves to admit her mistake and backtrack on her damaging NICs hike and shelve the anti-growth Employment Rights Bill before more businesses are driven to the wall.”
Sam Bidwell, Director of Research at the Adam Smith Institute, said:
“Our Business Confidence Survey paints a stark picture - businesses are losing confidence in the UK at a time when the country desperately needs growth, investment, and innovation.
The Government has said that growth is their number one mission- but it’s impossible to achieve this without a booming private sector. It is the business owners and the entrepreneurs who create wealth and prosperity, not bureaucrats in Whitehall.
The UK could easily be a fantastic place to do business- we have world class universities, an internationally recognised financial sector and innovative enterprisers. But the message to the Government from these business leaders is clear: to grow, they need lower taxes, simple regulation and an economic model which rewards risk. The Chancellor could start to make this a reality today by scrapping the anti-business hike to Employers’ National Insurance, while also taking steps to reform planning, regulation, and our litigation funding model.”
-ENDS-
About the Survey:
In light of growing concerns about the UK’s business confidence landscape, the Adam Smith Institute’s first-ever ‘Business Confidence Survey’ aims to capture the scale of private sector frustration with the status quo in the UK and highlight particular ‘pain points’ experienced by business-people. Respondents were given an opportunity to provide both general and specific thoughts; these thoughts were collective using both qualitative and quantitative survey methods.
Responses were submitted anonymously, thereby allowing businesses to speak more freely about their concerns. Many of the businesses that we surveyed work directly with the Government; others might be concerned about expressing their frustrations openly, for fear of being perceived as ‘political’. However, all responses were subjected to review and assessment to ensure validity.
All in all, we surveyed 192 UK business leaders, seeking responses from a wide variety of sectors and geographies. Collectively, these 192 business leaders constitute a diverse cross-section of the UK business landscape, and represent approximately 100,000 employees.
Sectoral Breakdown
32.5% Financial and Professional Services
16.2% Retail
11.5% Hospitality and Leisure
11% Technology and Digital Services
9.4% Manufacturing
5.8% Education
4.7% Construction
4.7% Real Estate
4.2% Communications
Notes to editors:
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The Adam Smith Institute is one of the world’s leading think tanks. It was ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.