Keir Starmer's Budget has shaken business confidence, an IoD survey finds (Image: Getty)
Prime Minister Sir Keir Starmer faces a fresh blow as business confidence crashes to a new low after Rachel Reeves' tax raid.
The Chancellor's Budget tax rises have damaged the private sector's ability to invest in their businesses and workforces, according to the Institute of Directors (IoD).
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Its Economic Confidence Index, which measures business leaders' optimism in the economy's prospects, fell to -65 in November from -52 in October.
Business confidence in the economy is now close to the record low seen at the start of the Covid pandeminc in April 2020 (-69) and marks the second lowest reading of the index since it was launched in July 2016.
Shadow Business Secretary, Andrew Griffith, described the IoD figures as shocking, adding in a post on X: "Reeves’s summer of ‘trash talking’ the economy, Labour’s jobs tax and the trade union-inspired Employment Bill are knocking the stuffing out of UK businesses."
The IoD's findings show 73% of business leaders felt economic conditions were having a negative impact on their organisation in November, up from 56% in August.
READ MORE: Chaos at Alex Salmond memorial as SNP's John Swinney booed by mourners
The IoD says business confidence is near the Covid pandemic's record low (Image: Getty)
News of crashing business confidence comes as Sir Keir prepares to reset his Government again, this time with a "plan for change" that includes milestones in policy areas to achieve Labour's manifesto ambitions. A key plank of the party's goals is to grow the economy so the latest IoD survey will set alarm bells ringing in Downing Street.
According to the IoD, employment tax has replaced skills and labour shortages as the second biggest concern for business leaders. The Institute said concerns remain around planned changes to employment regulations, which the IoD warned would substantially increase business costs.
Anna Leach, chief economist at the Institute of Directors, said: "This is a sobering set of results. As businesses continue to absorb the consequences of the Budget for their business plans, confidence has continued to plummet and is approaching the lows reached at the onset of the Covid pandemic.
"Far from fixing the foundations, the Budget has undermined them, damaging the private sector’s ability to invest in their businesses and their workforces."
Small business leaders from across the UK warned the Labour Government risks undermining its ambition to turbocharge Britain's economic growth.
Jon Maloney, Founder of Century Business Finance told Express.co.uk: "Given what was in the Budget, it’s unsurprising confidence is so low.
"The number of knocks SMEs have taken over these past 4-5 years is huge. You can’t just keep hammering businesses and expect them to continually suck it up."
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David Belle, founder and trader at Fink Money, said the fact he is in the process of moving to Portugal explained how he is feeling. Mr Belle added: "It is not just the tax raid though — it’s the sheer incompetence crisis we are going through."
Ken James, director at London based Contractor Mortgage Services said: "Rachel Reeves' tax raid and sheer ignorance of the impact on businesses has left the uk market reeling in a spiral of self-doubt and confusion. This will continue to push business owners to make some difficult decisions."
Luxury holiday home founder, Kate Allen, of Finest Stays in Devon, told Express.co.uk business confidence has plummeted faster than a lead balloon, leaving small business owners adrift in a choppy sea of anti-business policies.
She added the Budget wasn't just anti-business, but also anti-growth: "Like tossing a life ring filled with sand to those struggling to stay afloat in stormy economic waters.
"Confidence will remain in freefall unless we see policies that champion enterprise rather than treating it as a convenient scapegoat."
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A Government spokesperson said: "Last month we delivered a once in [a] Parliament budget to wipe the slate clean and deliver change by investing to repair the NHS and rebuild Britain, while ensuring working people don’t face higher taxes in their payslips.
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"At the same time, more than half of employers will either see a cut or no change in their National Insurance bills. We are permanently cutting business rates for retail, hospitality and leisure from 2026 for the first time and we have capped corporation tax at 25%."
The spokesperson added the Government is now determined to go for growth and to work in partnership with businesses to invest in Britain’s future to make every part of the country better off.
They continued: "That is why the Government is reforming the planning system, reforming regulation, tackling barriers to trade and taking forward the ￡63bn of private sector investment announced at the International Investment Summit."