Firms Delay Hiring and Investment as Budget Approaches

Recent statements from a major business group indicate that many companies are putting a halt on hiring and delaying investment decisions. This hesitancy is largely linked to concerns over potential tax increases anticipated in the forthcoming government Budget.

According to Ben Jones, the lead economist at the CBI (Confederation of British Industry), some businesses are waiting to make crucial decisions until they gain "more clarity" on the economic policies of the new government.

The government is expected to outline its tax and spending plans in the Budget scheduled for 30 October.

These remarks from the CBI emerged as new statistics revealed that the UK economy experienced a modest growth of 0.2% in August. This growth spurt was largely attributed to an upturn in construction and a strong performance from sectors including accountancy, manufacturing, and retail, following a period of stagnation in June and July.

However, the Office for National Statistics (ONS) cautioned that the overall outlook for the UK economy remains one of slowing growth, even with the positive figures from August. Liz McKeown, director of economic statistics at the ONS, highlighted that the broader trend indicates reduced economic momentum lately compared to the first half of the year.

Experts suggest that businesses are in need of a clearer understanding of the government's economic agenda and industrial strategies, especially with the UK set to host its International Investment Summit in London next week. At this summit, government officials will aim to draw in billions of pounds in investments.

The CBI, representing around 170,000 businesses, believes the government has a vital opportunity to stimulate economic growth by establishing a credible strategy to encourage business investment ahead of the Budget.

Surveys conducted by the CBI hint that companies may have started to slow down their activities in September, amid rising speculation about forthcoming announcements in the Budget.

Concerns Over Tax Increases

Prime Minister Sir Keir Starmer has stated that the upcoming Budget will likely be