A survey of 200 UK business leaders has delivered an effective vote of no confidence in new Prime Minister Andy Burnham on his first day in office. Three quarters of companies expressed concern over further tax increases, fearing that additional fiscal grabs could push them to the brink of collapse.
Business Confidence at Record Low
The DJH Future of Business report reveals that 75% of businesses are worried about more tax rises under Burnham. Over two-thirds of firms are concerned about a Burnham-led government overall, believing it will be a 'Nightmare on Downing Street' and remain deeply cynical about any meaningful improvement to flatlining economic growth. More than half of the respondents want a snap general election.
Shadow Chancellor Sir Mel Stride said: 'The latest inhabitant of No 10 wants to lurch to the left and we all know what that means: higher taxes. It's little wonder business confidence is so low and so many employers are worried about what Burnham's coronation means for their finances. And things are likely to get worse, whoever Burnham appoints as his Chancellor.'
Threat of Relocation to America
Some businesses have threatened to relocate to America, citing lower taxes and cheaper energy as opportunities to turbocharge profits. British entrepreneur Mitchell Barnes, a double King's Awards for Enterprise winner and boss of precision printing specialists RYSE 3D, said: 'Right now, the opportunity is in America: lower taxes, cheaper energy, a government that actually wants manufacturers, and customers who want to buy. Every year the UK piles more cost onto employment and more money into a welfare system that rewards inactivity, the case for moving operations across the Atlantic gets stronger. I'm not alone in doing that maths – every ambitious manufacturer I know is doing it too.'
Impact of Previous Tax Hikes
Under Chancellor Rachel Reeves, who is expected to be sacked by Burnham, the government imposed £66 billion in tax rises over two budgets. The rise in National Insurance on employers, labelled the 'Jobs Tax', has had the biggest impact on 58% of businesses, according to the survey. Unemployment now stands at 4.9% for people aged 16 and over, equal to 1.76 million individuals, with youth unemployment at 16.2%.
British manufacturing ranks 11th globally in output, contributing 9% of the UK economy and 42% of exports, but low orders and high costs have led to prolonged sluggish growth. Firms face some of the world's highest energy costs and a chronic skills shortage.
Calls for Action
Barnes outlined a list of demands: 'Scrap the National Insurance rise on employers – it's a tax on jobs, nothing more. Sort out industrial energy prices, because British manufacturers pay some of the highest in the developed world. Fix research and development tax credits so innovators are backed rather than audited to death. And make government procurement buy British-made – America does it without apology, and so should we.'
DJH chief executive Scott Heath said: 'It's clear Burnham has work to do to convince a somewhat sceptical business community that he is the right man to take the economy forward.'
Political Response
A Labour Party spokesperson said: 'We know that after years of economic uncertainty, businesses want stability and a pro-business government focused on growth. That's exactly why we will back businesses across every region of the UK to unlock investment, create good jobs and build a stronger economy for the future.'
