Business confidence plunges as bosses fear Burnham tax raids

By the Editorial Team · Friday, July 10, 2026

Business confidence in the UK has fallen to its lowest level in nearly 18 months, with only 26% of companies expressing optimism amid rising concerns about potential tax changes under incoming Prime Minister Andy Burnham. This decline, driven by increased labor costs, fears of government tax adjustments, and weak consumer demand, has led many businesses—especially in the services sector—to reconsider investment and spending decisions.

Business confidence in the United Kingdom has declined to its lowest point in nearly 18 months amid rising concerns over potential tax increases under the anticipated leadership of Andy Burnham. According to a survey conducted by S&P Global in June, only 26% of companies reported optimism about the business outlook, marking the weakest sentiment since February 2025.

The survey, carried out between June 11 and 26, highlighted a "triple squeeze" affecting firms: escalating labour costs, apprehension over government taxation, and sluggish consumer demand. These combined pressures have led many companies, particularly in the services sector, to reconsider investment and spending plans. David Owen of S&P Global noted that these factors have caused businesses to become more cautious in their operations.

The drop in confidence comes as Burnham is poised to become prime minister following Sir Keir Starmer’s announcement of his resignation during the survey period. Burnham has affirmed his commitment to Labour’s manifesto, which pledges no increases to income tax, value-added tax (VAT), or National Insurance. However, in a recent interview with LBC, he acknowledged “some room within that manifesto for movement on tax,” fueling concerns among business leaders about possible future tax hikes.

The services sector experienced the most pronounced decline, registering its lowest confidence level in over three years. The proportion of businesses expecting a decline in output in this sector reached a record high, excluding downturns linked to the 2008 financial crisis and the economic fallout following the 2022 mini-Budget. This pessimism coincides with firms struggling amid rising inflation fears, partly attributed to geopolitical tensions surrounding the war in Iran, which may further depress consumer spending.

Businesses are now facing a complex environment where higher labor expenses, potential changes in taxation policy, and weak demand create significant uncertainty about the year ahead. Requests for comment from Burnham were not returned.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.