UK Labour government faces growing business discontent

A year after coming to power, the UK Labour government is facing a sharp decline in business confidence. Initial optimism has been replaced by discontent over rising taxes, more administrative barriers, and a lack of dialogue with the authorities.

The increase in National Insurance contributions has dealt a blow to companies, especially retailers and those with large workforces. Many of them have started to cut jobs and move operations overseas. The hike in the minimum wage has made matters worse. 

The abolition of a tax break for non-domiciled residents, so-called non-doms, has hit the business community. With part of it departing, the UK could lose up to 12.2 billion pounds ($16.6 billion), as well as thousands of jobs, according to estimates. Foresight Group notes that higher taxes do not always boost budget revenues, but they do weigh on economic activity.

Given anemic GDP expansion and high inflation, businesses are calling for caution in the approach to taxes. Experts warn that new measures could slow down growth and hurt the labor market.