Monday 06 July 2026 12:29 pm
Rachel Reeves' tax raid on business is choking investment, the BCC found
Investment by British businesses has fallen to its lowest level since the pandemic as companies warn they are being “taxed out of existence”, one of Britain’s biggest business groups has found.The proportion of firms planning to increase investment fell to just 17 per cent in the second quarter, down from 21 per cent in the first three months of the year, according to the UK’s largest business sentiment survey, conducted by the British Chambers of Commerce.Confidence also slumped in the three months to the end of June as inflation re-emerged as a concern for companies and less than a third boosted their sales. Energy costs rose sharply in the second quarter of the year as the war in Iran choked off oil supplies and pushed up prices across Western economies. Businesses are also still grappling with the hefty tax bill brought on by Rachel Reeves’s first budget as chancellor in 2024, which hiked national insurance payments for employers, the BCC said. “Most firms are now experiencing policy as downside risk rather than opportunity – with the rise in employer [national insurance contributions] a prominent example, still being felt almost two years on,” said David Bharier, deputy director economics and insight, at the British Chambers of Commerce.“Reducing the cost and complexity of the administrative burden would give many firms the space to grow.”One small Yorkshire-based services company told the BCC it was being “taxed out of existence”.The survey found that just 44 per cent of businesses said they expected improved turnover in the next 12 months, down from 49 per cent when they were asked earlier in the year. Meanwhile, 23 per cent expect a decline in sales.
