Business optimism has fallen to an 18-month low, with firms citing rising labour costs, tax uncertainty and weak demand as the three primary pressures. The CPA reports that HMRC is simultaneously intensifying enforcement activity — with some tax investigations now taking up to eight years to conclude, creating prolonged uncertainty for the businesses caught up in them.
The FSB has described a new ‘cost crunch’ as energy standing charges rise by 40%, business rates are expected to increase 52% over the next three years, and minimum wage and Statutory Sick Pay costs continue to climb. The Business and Trade Committee has pushed back on a Government response that it says ‘restates pre-existing schemes’ and only fully accepts six of its 36 recommendations.
The practical message for clients: the external environment is not going to get easier in the near term. Businesses that invest in their financial foundations now — cashflow management, pricing discipline, tax planning — will be better placed when conditions improve.