Tax hikes are crippling Britain: Business chiefs accuse Labour of failing to
Tax rises are hitting jobs and growth, Britain’s leading business group has warned, as it accused Labour of failing to take the ‘bold choices’ needed to boost the economy.
The Confederation of British Industry (CBI) predicted another sluggish period of expansion for the UK amid ‘persistent weakness’ in the private sector.
Its forecasts for gross domestic product (GDP) have been upgraded slightly – from 1.2 per cent to 1.4 per cent this year and from 1 per cent to 1.3 per cent in 2026.
But the CBI said that was largely driven by a short-term public sector spending splurge, to be paid for with tax rises taking effect from 2028.
And it masks a tough underlying outlook, with household spending hit by dismal growth in living standards and business investment subdued thanks to weak demand, high costs and uncertainty at home and abroad.
The forecast comes after a Budget that piled further tax pain on households and firms but did little to spark a sustained economic bounce.
The Confederation of British Industry predicted another sluggish period of expansion for the UK amid ‘persistent weakness’ in the private sector
CBI chief economist Louise Hellem said: ‘The momentum that we saw early in 2025 has clearly faded through the year.
‘There has been a temporary boost from some of the announcements in the Budget, particularly around Government spending in the short term.
But there’s nothing that provides a lasting impetus to business investment and growth, which is telling given the Government’s priority around growth and the growth mission.’
Hellem said ‘the ambition is there’ with longer-term reforms on planning and infrastructure, but added: ‘We would definitely like to have seen a lot more in the Budget on growth. But I think it was a Budget for stability rather than growth.’
The forecast comes as firms continue to reel from Labour’s raid on employer national insurance as well as sharp increases in the minimum wage and soaring energy bills.
Hellem said the Budget left ‘too many bold choices unaddressed’, adding: ‘If the Government is serious about restoring confidence and turbocharging its growth mission, it must urgently address some of the biggest barriers to competitiveness.’
These included ‘crippling’ energy costs, a costly and overcomplicated business tax regime and uncertainty around future employment costs.
It comes a day after a separate forecast from the British Chambers of Commerce, another business group, warned the UK was set to remain ‘stuck in low gear’, after the Budget failed to boost growth.
GDP figures for October,out today, are expected to show a sluggish month of just 0.1 per cent growth.
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