Over half of business leaders expect a recession this year
Business leaders’ confidence is at a “crossroads” just weeks ahead of the Government’s tax hikes kicking in, according to fresh research.
BCG’s Centre for Growth surveyed 1,500 bosses in its “State of UK Business” report and found 57 per think a recession is likely this year.
This follows Friday’s release from the Office for National Statistics, which showed the UK economy had shrunk 0.1 per cent in January in a fresh blow to Labour’s growth agenda.
Over 60 per cent of survey respondents said the increase in national insurance contributions (NIC) would inflate their costs, with construction, manufacturing, mining and utilities bosses most concerned.
The changes, set to come into effect in April, will hike employers’ NIC by 1.2 per cent to 15 per cent.
A third of businesses named the Government’s tax increases as a key concern.
The report said: “Nervousness regarding the direction of the UK economy appears to be linked to growing fears around the impact of higher taxes on respondents’ businesses.”
Businesses have ‘low confidence’ in broader economy
The survey outlined leaders’ priorities for the Government, with a simplified tax system and lower tax levels topping the list at 77 per cent.
Over half of respondents said less government spending and lower taxes would help companies similar to theirs.
Nearly three-quarters of business leaders said they planned to increase prices in the next year, amidst weighing costs.
Raoul Ruparel, director of BCG’s Centre for Growth, said: “This year’s findings highlight the disconnect between the high confidence business leaders feel towards their own business versus the low confidence they hold towards the economy more broadly.
“With inflation ticking up, taxes rising and interest rates forecast to fall more slowly than previously expected, there is a potential risk that the national picture starts to bleed into business confidence.”
There were glimmers of positivity shared amongst respondents, with 83 per cent of business leaders confident about their own prospects for the upcoming year, which was up from 80 per cent in 2024.
Despite tax fears, three-quarters of bosses planned to expand or maintain their headcount.
Ruparel added: “The task now is for the government to embrace alternative ways to reduce the burden on business, including: reducing the regulatory burden, providing maximum certainty on policy direction and taking action to bear down on energy costs.”