Disaster for Rachel Reeves as confidence in economy hits 'rock bottom'

Rachel Reeves is facing misery from business leaders whose confidence has hit "rock bottom" in her plans for the Budget, a new survey has revealed. As rumours mount the Chancellor could be set to unveil a host of hikes hitting everything from income tax to pensions, the private sector is getting increasingly nervous about the effect tax rises could have on the nation's spending power.

The Institute of Directors (IoD), which has a membership of approximately 20,000 members, comprising individual directors and business leaders, said readings in polls of optimism in the economy remained at a historic low. The index stood at a dismal minus 73 in October, only up slightly from negative 74 in September. The confidence rating in Britain's economic picture is the lowest reading since the poll started nine years ago. The IoD survey also found expectations for business to hire new staff also remained negative, at minus 2.

Anna Leach, the chief economist at the IoD, told the Telegraph: "Business confidence remained at rock bottom in October, as businesses expect the worst from the autumn Budget."

Ms Leach told the paper that many companies were putting major decisions on recruitment and investment "on hold" before the Budget on November 26.

She added: "Policy uncertainty ahead of the Budget and a rumour mill is really leading to a lot of wait-and-see behaviour."

It's been reported the Chancellor is looking to fill yet another black hole in public finances following her record tax-raising Budget in 2024. The affects of Ms Reeves's decisions have been keenly felt by businesses who are still counting the cost of her increase in employer National Insurance contributions.

Sir Mel Stride, the shadow chancellor, told the Telegraph: "Businesses are stalling on hiring and investment because they simply don't trust Labour to keep their word.

"Rachel Reeves promised the most pro-business Treasury ever. Instead, she's hit employers with a £25bn jobs tax - and now even more taxes are coming because she hasn't got a plan or the backbone to control spending.

Ms Reeves is widely expected to increase taxes next month as she attempts to bridge a gap in her spending plans thought to amount to more than £20 billion. Last week, Sir Keir Starmer declined to repeat his commitment to Labour's manifesto pledge not to raise income tax, national insurance or VAT.

A Treasury spokesman said: "We are a pro-business government that has delivered the fastest growth in the G7 since the start of the year, helped interest rates to fall five times since the election and established new trade deals with the US, EU and India - all helping to reduce business costs.

"We have also capped corporation tax at 25pc and we are reforming business rates."