Business confidence is at a historic low, according to the Institute of Directors (IoD). The latest survey shows a reading of minus 73, slightly up from minus 74 in September. Anna Leach, chief economist at the IoD, said: “Business confidence remained at rock bottom in October, as businesses expect the worst from the autumn Budget.” Companies are delaying investment and hiring due to uncertainty over potential tax increases. Capital Economics predicts that Chancellor Rachel Reeves will raise taxes by £38bn, adding to last year’s £41.5bn increase which included a £25bn raid on employers’ National Insurance Contributions that saw some employers freeze recruitment, reduce headcounts and increase prices.

Optimism among mid-sized UK businesses has rebounded, with 57% of leaders now confident in growth over the next 12 months, up from 45% in June, according to BDO. Firms with annual sales of £10m to £300m have endured economic uncertainty, including inflation, higher taxes, and global trade disruptions, but are showing resilience. Business leaders want practical cost relief, such as energy incentives, business rates reform, improved capital allowances, and clearer R&D relief, while a quarter favor a three-year business tax moratorium.

The EY Item Club has downgraded the UK’s economic growth forecast for next year to below 1%. This follows a reassessment by the Office for Budget Responsibility, which is expected to cut productivity growth by 0.3 percentage points, leading to a £21bn reduction in government income. Matt Swannell, chief economic adviser, said: “The combination of potential tax rises, global trade disruption and high interest rates is still anticipated to put a brake on economic momentum.” Unemployment is projected to peak at 5% next summer, further slowing earnings growth.

The Times reports on how the Chancellor is going back and forth with the Office for Budget Responsibility (OBR) over the state of the UK economy as she considers more than one hundred separate tax and spending measures. Several OBR projections are yet to come, including the level of debt interest payments and elements of its forecasts around future GDP growth. Amid all the uncertainty, sources say Treasury officials have been told to protect those in the lower two thirds of income, which would likely expose those earning more than £45,000. This comes amid reports that the Prime Minister and Rachel Reeves are ready to break Labour’s manifesto pledge not to increase taxes on working people.

Chancellor Rachel Reeves has appointed Emily Fry and David Sturrock as Budget advisers as she looks to address a £30bn black hole in public finances. The former think tank researchers advocate for significant tax increases on assets and investments, including National Insurance on employer pension contributions. Ms Fry, who was an economist at the Resolution Foundation, previously suggested raising £20bn through inheritance and capital gains taxes, while Mr Sturrock, formerly an associate director at the Institute for Fiscal Studies, has called for reductions in tax-free pension lump sums. Shadow Chancellor Sir Mel Stride commented: “This is a team that has proposed tax hikes on everything – pensions, family homes, employers, fuel, council tax, inheritance. You name it they want to tax it.”

Rachel Reeves’ proposed inheritance tax changes could jeopardise family-run businesses, warns David Wernick, executive chairman of the Wernick Group, a construction firm. He stated that the reforms to Business Property Relief (BPR) would create significant tax liabilities, forcing companies to sell assets or incur debt. Wernick stressed the importance of family firms in driving growth and supporting local communities. Esther McVey, Conservative MP, echoed these concerns, stating that Labour’s tax plans could lead to the demise of long-standing family businesses. Without urgent government action, the construction sector may face closures and job losses.

Chancellor Rachel Reeves is planning to introduce a “settling up charge” for wealthy Britons leaving the UK. This 20% tax on business assets aims to raise £2bn as the Treasury looks to address public finance shortfalls. Currently, those leaving the UK can sell British assets without capital gains tax, but the new policy would require payment upon departure. James Smith from the Resolution Foundation warned that their could be an exodus if the tax is announced without immediate implementation.

The FTSE 100’s five leading banks reported a combined pre-tax profit of £12.3bn for Q3, despite challenges like impairment charges and missed profit expectations from HSBC and Lloyds. NatWest and Standard Chartered exceeded forecasts, with NatWest posting its highest quarterly profit since 2008. The FTSE 350 banks index rose nearly 4% in October and is up 17% year-to-date, as profits and dividends outweighed sector headwinds. Peter Rothwell, head of banking at KPMG UK, commented: “This quarter has had its share of headline challenges… but if you look through the noise, the underlying picture for the major UK banks has been cautiously constructive.” However, the sector faces potential tax increases in the upcoming Budget, which could impact profitability.

Andrea Baldo, CEO of Mulberry, has warned that the UK’s tourist tax is hindering the luxury sector’s recovery. He suggests that reinstating VAT-free shopping for overseas visitors could stimulate the economy and benefit local businesses. Spending by non-EU visitors in the UK remains at only 75% of pre-pandemic levels, while other European countries have seen significant increases.

With the Budget approaching, lenders are said to be concerned about a potential increase in the bank surcharge, which places additional taxes on their returns. Currently set at 3%, the surcharge applies to banks with profits exceeding £100m. Analysts predict a rise to 5% could be on the cards, while John Cronin, a banking analyst at research firm SeaPoint Insights, says it could go back to 8%, the level at which it stood until 2023. He also expects a hike in the surcharge to be a “temporary change.” While the TUC has been lobbying the Government to increase the surcharge, suggesting a return to 8% could generate £8bn over the next four years, the Institute for Fiscal Studies says that an increase to 6% could raise £1.2bn for the Treasury.

Some of Britain’s biggest banks are facing criticism for failing to detail their exposure to the shadow banking sector, an unregulated part of the financial system that includes private lenders, hedge funds, and private equity firms. Sheel Shah, banking analyst at JPMorgan, has voiced concern over “very poor disclosure” in relation to how much money banks have lent to the non-bank lending market, especially from European lenders. With lending by these non-banks becoming increasingly complex, analysts have warned that the lack of transparency could cause shocks to spread through the financial system. Bank of England Governor Andrew Bailey has ordered a stress test of the shadow banking sector to assess systemic risks.

The UK’s unemployment rate has reached 4.8%, the highest in four years, with nearly 1m young people not in education, employment, or training. Sir Charlie Mayfield’s upcoming Keep Britain Working review will recommend actions to support those with disabilities and health conditions. He pointed to the need for businesses to invest in employee health, stating: “Investment in employee health and wellbeing should not be a burden.” The TUC warns that the current employment system fails disabled individuals, urging reforms to improve job access and support for the economically inactive.

The Royal Society of Public Health (RSPH) warns that 600,000 people may exit the UK workforce due to long-term health conditions over the next decade. By 2035, over 3.3m adults could be economically inactive, costing the UK £36bn annually. The RSPH’s chief executive, William Roberts, stated: “We need a fundamental shift in how we see the role of employers in keeping people healthy.” The upcoming Keep Britain Working review aims to address these issues and recommend measures for better workplace health support.

The proposed minimum wage increase to £12.70 an hour could equal or exceed starting salaries for graduates in professional services, raising concerns about recruitment in sectors like accountancy and finance.

James Reed, CEO of recruitment firm Reed Employment, has voiced concern over the employment market, saying: “It’s a jobs drought – more of a desert actually.” This comes with unemployment having risen to 4.7%, marking a four year high, and Office for National Statistics data showing that there have been 39 consecutive periods of declining vacancies. Mr Reed attributes this to increased National Insurance costs and the proposed Employment Rights Bill, which he believes will deter hiring. He notes a significant drop in graduate vacancies, projecting only 50,000 this year and noting that this marks a 9% year-on-year decline.

Research from wealth manager Stratiphy reveals that nearly 70% of Londoners plan to invest in the stock market within the next year, with this significantly higher than the UK average of 40%. In 2023, 49% of Londoners invested, compared to 32% nationwide, with an average investment of £21,000. The Treasury is currently working to increase investment in British firms, with plans for a targeted support scheme before the 2026 ISA season. As the Budget nears, a cut to the £20,000 cash ISA ceiling and the removal of the 0.5% tax charge on the buying of shares in newly listed companies are among changes that the Chancellor is said to have been considering.

Analysis by Oxford Economics shows the UK’s national debt has almost tripled from 2005 to 2025, amounting to £2.9tn. This is nearly as large as the entire economy and costs over £100bn a year in interest payments. The rate of increase in the debt burden is faster than any other advanced economy, with only the US and Spain coming close. Michael Saunders, from Oxford Economics, said: “It’s something we should be concerned about. We do stand out, and not in a good way. The extent to which UK debt has risen is part of the cause of high UK yields.” The Telegraph points out that economists now fear the UK will enter a “doom loop” of high debt costs and low growth.

The Bank of England is expected to maintain interest rates at 4% during its upcoming meeting. Economists are divided, with some, including Barclays and Goldman Sachs, predicting a cut to 3.75% due to recent economic data. UK Consumer Prices Index (CPI) inflation remained at 3.8% in September, contrary to expectations of 4%. Edward Allenby from Oxford Economics said: “On balance, data published since the September meeting should help to slightly ease some of the MPC’s worries about above-target inflation persisting. But it’s unlikely to be enough to convince a majority to back a November rate cut.”

Nigel Farage, the leader of Reform UK, plans to deliver a speech in London ruling out tax cuts until public spending has been reduced. He aims to create “the most pro-business” government in British history, arguing that the UK has not fully capitalised on Brexit. “The harsh truth is that regulations and regulators…are worse than they were back in 2016,” he will say. Reform’s manifesto committed the party to tax cuts worth about £90bn. However, Farage will explain that successive governments have “wrecked the public finances” and his administration would now need to get public spending under control before cutting taxes.