The operator of the Channel Tunnel, Eurotunnel, has announced it is cancelling all future investments in the United Kingdom, citing a crippling increase in its business rates bill that is set to triple within years. This decision adds to growing fears that the Labour government's tax policies are making Britain an unattractive destination for business investment.
Investment Freeze and Scrapped Projects
Eurotunnel confirmed it has scrapped its investment plans after learning that its annual business rates bill will surge from £22 million this year to £65 million by 2028. Yann Leriche, the chief executive of Eurotunnel, stated unequivocally to the Financial Times that the expected tax increase 'makes all of our investments lossmaking, so we won't be making any more investments.'
As a direct consequence, the company will no longer proceed with two key projects: the reopening of a freight terminal in Barking and the launch of a new direct freight service from Lille. These initiatives, which represented a combined investment of £15 million, are now indefinitely on hold. Leriche added that the firm has 'frozen our investment in rail assets in the UK.'
Broader Business Backlash and Economic Jitters
Eurotunnel's move is not an isolated case. It follows similar investment cancellations from corporate giants including ExxonMobil, AstraZeneca, and Merck. Furthermore, Gatwick Airport has recently warned that its own future investments, such as a second runway, are jeopardised by a potential 300 per cent rise in its business rates.
The announcements come amidst significant economic uncertainty ahead of next week's Budget. A survey from the Confederation of British Industry (CBI) revealed a sharp deterioration in the manufacturing sector. Factory output fell at its fastest rate since August 2020 during the pandemic. The CBI's lead economist, Ben Jones, noted that firms consistently linked the slowdown to Budget uncertainty, with customers delaying purchases and investment.
Consumer Confidence and Government Pressure
Meanwhile, a separate report from market research firm GfK showed a 'bleak' dip in consumer confidence. Households are reportedly bracing for a financial hit from the Chancellor, with a 'troubling' decline in intentions to make major purchases. This poses a direct threat to retailers as they enter the crucial festive trading period.
The political fallout has been swift. Tory business spokesman Andrew Griffith accused the government of 'milking businesses to the point no one is investing', warning that the country will fail to get the infrastructure it needs. The Institute of Chartered Accountants in England and Wales found that 81% of firms believe Chancellor Rachel Reeves must signal a clear change of direction in the Budget, demanding no more business taxes and reforms to VAT and business rates.
In a further sign of market nerves, UK borrowing costs rose sharply. Yields on ten-year government bonds (gilts) spiked to a four-week high, with investors anticipating the government will issue a total of £308 billion in gilts this financial year—the highest level since the pandemic—amid concerns over how the government will fill its financial black hole.
