Breaking News: British Firms Concerned About Tax Impact and Middle East Conflict - Investment Insights 2021
In a recent survey conducted by the British Chambers of Commerce, it was revealed that British firms are growing increasingly downbeat about the economic outlook. The main areas of concern cited were taxation, as the new Labour government's upcoming autumn budget looms, and the escalating conflict in the Middle East.
According to the survey, 48% of the 5,152 companies surveyed expressed worries about taxation, up from 36% in the previous survey. David Bharier, BCC head of research, highlighted the growing anxiety among businesses regarding economic policy and taxation as their primary concern.
Finance minister Rachel Reeves is set to announce the tax-and-spending autumn statement, with warnings of potential tax increases in the upcoming budget. Reeves is expected to change fiscal rules to allow for more borrowing, potentially boosting investment and economic growth.
The survey also revealed that 56% of businesses expected turnover to increase in the next 12 months, down from 58% in the previous quarter. However, most businesses no longer expect profits to rise, and only a fifth reported an increase in investment.
Despite interest rates falling and inflation easing, investment levels remain low, with most small and medium-sized firms hesitant to invest, according to Bharier. Worries about interest rates and inflation have been on the decline, with expectations of a further reduction in borrowing costs by the Bank of England at its next meeting in November.
Analysis: The concerns raised by British firms regarding taxation and economic policy, coupled with the impact of the Middle East conflict, highlight the uncertainty and challenges facing businesses in the current economic climate. Investors should monitor developments in the upcoming autumn budget and government policies to assess potential impacts on their investments and financial decisions. Additionally, the cautious approach to investment by businesses indicates a need for stimulus measures and supportive policies to encourage economic growth and investment in the UK economy.