UK business optimism falters amid higher taxes

UK business sentiment sharply declined in the fourth quarter of 2024 compared to previous quarter, staying just positive, with higher business taxes in the Autumn Budget being the main factor, alongside an economic slowdown, according to the Institute of Chartered Accountants in England and Wales (ICAEW). Confidence dropped across all sectors and regions compared to the previous quarter.

The tax burden, now the most significant challenge for businesses, reached a record high in the fourth quarter of 2024, surpassing regulatory requirements.

Domestic sales growth slowed but remained slightly above average, while exports saw a small increase, still falling below historical norms. However, businesses remain optimistic, predicting improved sales growth both domestically and internationally in the coming year.

While input costs and salary growth eased, boosting profits above average, projections for capital investment and R&D growth weakened, with both expected to slow next year. Sentiment declined across all sectors, with the construction sector facing the largest drop, while retail & wholesale became the most pessimistic, falling into negative territory.

The survey results are derived from 1,000 telephone interviews with ICAEW Chartered Accountants across various UK sectors, regions, and company sizes, providing a representative snapshot of the UK economy. The most recent quarterly data reflects the period from 14 October to 13 December 2024.

Attribution: Amwal Al Ghad English

Subediting: Y.Yasser

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