Business leaders in the United Kingdom are expressing growing concern over the government’s economic policies as the Chancellor prepares to deliver the upcoming Budget. Despite Labour’s 2024 election victory on a platform of pro-business promises and deregulation, executives report increased uncertainty and frustration after two years of tax hikes and expanded workers' rights.
The mood among corporate executives was evident at a private event held at the British Museum in London on Wednesday, where representatives from major firms including BP, KPMG, Diageo, and Equinor gathered for a rare viewing of the Bayeux Tapestry. Though the evening celebrated cultural heritage, discussions highlighted widespread unease about the current economic climate and the government’s approach to business.
Labour initially pledged to support growth by reducing red tape and easing tax burdens. However, since coming to power, the government has implemented a series of tax increases totaling nearly £70 billion, including a £25 billion rise in employers’ National Insurance contributions. Additional worker protections and minimum wage increases above inflation have further elevated costs for businesses, particularly in sectors with tight margins such as retail and hospitality.
Prime Minister Andy Burnham, who took office earlier this year, has sought to signal a shift by introducing a business rates cut for hospitality firms in his first week. Yet with the Budget imminent, many executives remain apprehensive that new tax measures will follow the patterns of previous administrations. Chancellor John Healey is reportedly considering raising the banking sector’s profit surcharge from 3% to up to 8%, potentially generating an additional £2 billion in revenue but drawing criticism from financial industry leaders who warn this could undermine London’s competitiveness.
The hospitality sector continues to struggle under the weight of recent tax increases and operational costs. Industry groups, including UKHospitality, have campaigned for VAT reductions and focused on the impending surge in business rates for hotels, which are expected to rise by an average of 110% over three years. Although Downing Street brokered an agreement for the industry to create 100,000 jobs for young people, trade executives say meaningful fiscal relief remains critical to sustaining growth and recruitment.
Some Labour allies have also voiced reservations about the government’s economic strategy. Andy Haldane, former Bank of England chief economist, cautioned that repeated tax hikes risk deterring investment, emphasizing the need to support thriving sectors rather than penalize them. The Confederation of British Industry’s director-general Rain Newton-Smith echoed this sentiment, highlighting business leaders’ frustration with policy inconsistency and regulatory burdens.
Concerns extend beyond immediate tax issues. Long-term investors are unsettled by perceived volatility in government commitments, such as fluctuating net zero deadlines and complex visa and planning systems. There is also apprehension about potential changes to the treatment of wealthy non-domiciled individuals and the threat of an exit tax, which has been cited as a factor in the relocation of high-profile business figures.
Efforts to reform the income tax system’s “tax trap” — which creates marginal rates as high as 60% for certain earners — have stalled amid fiscal pressures, limiting reforms that might otherwise provide relief for middle- and high-income workers.
As the government faces a substantial fiscal deficit, estimated by the Institute for Fiscal Studies at £35 billion, the Chancellor’s forthcoming Budget is seen as a pivotal moment. Business groups warn it will be the final opportunity to restore confidence and avoid permanent damage to the UK’s investment environment. Without clear signs of stability and a supportive policy framework, some industry leaders fear Britain risks losing ground to global competitors and deterring future entrepreneurial activity.