Business leaders criticize UK Budget for limited growth measures and higher bank taxes
The latest UK Budget drew criticism from business groups and economists, who said it fell short on growth support, increased bank levies and offered poorly targeted energy aid.
The Office for Budget Responsibility warned that the UK’s growth forecast could be revised lower if the conflict in the Middle East persists, noting a drop in the projected 2026 growth rate to 1% from 1.6% earlier in the year. Chair Jonathan Haskel said higher government borrowing costs, driven by the Iran war, added a £14 billion burden to the fiscal outlook.
Business representatives expressed disappointment with Chancellor John Healey’s budget. Shevaun Haviland of the British Chambers of Commerce said the decision to double the surcharge on bank profits would raise financing costs for small firms and “taxing one part of the economy to help another is not cost-free.” Tina McKenzie, national chairman of the Federation of Small Businesses, said the budget “missed the mark” for small companies facing rising energy bills and warned many may cut jobs.
Former Business Secretary Sir Vince Cable described the fiscal environment as “austere” and suggested the government may need to seek a new mandate to raise taxes. He warned that public services could face “real-terms declines” in spending.
Economists also questioned the effectiveness of the £100 energy-support payment for households in council-tax bands A to D, calling it “extremely badly targeted” because it does not reflect actual energy consumption.
Lloyds Banking Group’s chief financial officer William Chalmers said the increased bank levy was “unhelpful” for growth and urged that any additional taxes remain temporary. Meanwhile, gilt yields fell slightly after the budget, and analysts such as Mohit Kumar of Jefferies said the budget offered few surprises and that major policy moves are likely to come in the next autumn statement.
“If the Middle East crisis goes on for longer than we had thought, then of course that would probably cause us to refine our growth forecast down,” said OBR chair Jonathan Haskel at a Resolution Foundation event.
“Taxing one part of the economy to help another is not cost-free,” said Shevaun Haviland, director general of the British Chambers of Commerce.
“This Budget should have been the moment to help small businesses with the soaring costs holding them back,” said Tina McKenzie, national chairman of the Federation of Small Businesses.
“£100 is nice, but the point is it’s extremely badly targeted,” said Greg Thwaites, interim chief economist at the Resolution Foundation.
“Additional taxes are unhelpful to achieving both of those objectives: UK growth or international competitiveness,” said William Chalmers, chief financial officer of Lloyds Banking Group.