British firms 'more concerned' about Labour tax hikes than Trump tariffs

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British Businesses Prioritize Inflation and Interest Rate Cuts Over Trump Tariffs, Survey Reveals

Concerns over inflation and rising interest rates have eclipsed worries about potential tariffs imposed by Donald Trump among British business owners, according to recent research. A new survey indicates that domestic economic pressures, particularly taxation, are a greater burden for businesses than international trade uncertainties.

Key Business Concerns: Inflation, Interest Rates, and Tax Burden

A significant 38 percent of business owners identified reducing inflation and interest rates as their primary concern. This data comes from a YouGov study commissioned by the accountancy firm Price Bailey. The survey highlighted a notable disparity in priorities when compared to Members of Parliament.

Taxation and Workforce Skills Follow Closely

Following closely behind inflation and interest rates, 34 percent of business owners cited lowering the overall tax burden as a top priority. Developing a highly-skilled workforce was also a major concern, selected by 32 percent of respondents.

The recent increase in employer National Insurance contributions, which rose earlier this month, from 13.8 percent to 15 percent on increased salary thresholds, is adding to the financial strain on businesses. This change, part of recent budget measures, is compounded by other tax increases, such as adjustments to capital gains tax on business sales.

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Diverging priorities: Research from Price Bailey highlights the different concerns of Members of Parliament and business leaders.

International Trade Less of an Immediate Worry for Businesses

Despite ongoing discussions about international trade and potential tariffs, only 26 percent of businesses considered it their main worry. This suggests that immediate domestic economic factors are currently taking precedence over global trade uncertainties.

MPs Focus on Skilled Workforce and International Trade

In contrast to business owners, Members of Parliament (MPs) participating in the survey prioritized different issues. A skilled workforce emerged as the foremost concern for 42 percent of surveyed MPs, followed by ease of international trade at 39 percent, and productivity at 38 percent.

Gap Between Political and Business Priorities

Price Bailey stated that the survey results ‘reveal a gulf’ between the perceptions of MPs and business leaders regarding the key drivers for economic growth. This divergence underscores differing perspectives on the most pressing challenges facing the UK economy.

National Insurance Hike Fuels Discrepancy

Chand Chudasama, a partner at Price Bailey, suggests that the recent increase in National Insurance contributions is a contributing factor to this discrepancy. He cautioned that this rise could worsen inflationary pressures, creating ‘a double hit of taxation and price increases’ which is counterproductive to business growth.

He further noted that businesses are understandably seeking ‘immediate pain relief’ through tax cuts and lower prices and interest rates given the current economic climate.

Political Focus vs. Business Needs

Price Bailey indicated that MPs’ emphasis on trade might be seen as a ‘less politically sensitive’ approach to stimulate economic growth without reducing tax revenues or impacting public services. This approach may differ from the more direct financial relief sought by businesses.

Trump Tariffs: A Secondary Concern?

While President Donald Trump’s tariff policies have sparked global concern, especially in the UK and Europe, due to potential economic repercussions, they appear to be a secondary concern for UK businesses at present.

Trump has implemented tariffs including a 10 percent baseline tariff on all goods entering the US and a 25 percent levy on specific sectors like cars, steel, and aluminium.

Chudasama acknowledged the increasing attention on trade since Trump’s return but reiterated that immediate business anxieties are centered on prices, taxes, and borrowing costs.

Balancing Public Services and Business Needs

Chudasama concluded by highlighting the inherent tension between political and business priorities: ‘It is understandable that politicians, in balancing competing demands, can’t always put the needs of business first. However, a strong economy is essential for well-funded public services.’

He added, ‘The Government faces difficult decisions regarding public spending, and it is often politically more expedient to increase taxes and regulations on businesses than to reduce public expenditure.’

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