Rachel Reeves has been warned against another tax raid (Image: Getty)
has been blasted for ruining “the confidence and trust of businesses” after hiking taxes in the .
Business chief Rupert Soames, who chairs the Confederation of British Industry (CBI), urged the Chancellor not to resort to another tax raid, as fears grow she might in order to stick to her own commitments.
He said in a speech in Birmingham on Wednesday: “The Budget may have worked to fill a hole in the public finances by significantly increasing taxes on business, but in filling one hole it has created another – in the confidence and trust of business … this is not conducive for encouraging businesses to invest.
“Up and down the country, businesses need to increase the rate of investment in growth, and they will only do that if they have confidence government policy will support them.”
This comes after the UK’s economy watchdog warned Ms Reeves this week she is at risk of breaking her own fiscal rules as it delivered its first verdict on the state of the country’s finances ahead of the Spring spending review.
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The revealed by Bloomberg, suggests Britain is on course for either spending cuts or higher taxes.
The Chancellor was told weak growth and surging borrowing costs have burned through the £9.9billion left for extra fiscal headroom she had allocated.
Now, Ms Reeves is on course for a Budget deficit thanks to her decisions, which would break a key promise.
The deficit has been born of a combination of cuts in forecasted growth, confirmed by the Bank of England last week, and the rising price of government borrowing – gilts.
Ms Reeves has pledged that day-to-day spending must be paid out of taxes and can’t come from borrowing.
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But the Chancellor has been urged not to resort to the latter to rebuild trust with the private sector.
Mr Soames added: “To restore business confidence, this Government must make sure its policies on all of those truly hang together in a way that makes sense for business.”
However, a Treasury source said the Chancellor had been clear she would not repeat the massive tax rises of her October Budget, largely confirming that if the OBR found Britain on course for a deficit it will be met with spending cuts.
On Thursday, showed Britain’s economy grew in the final three months of 2024 in an unexpected boost for the Chancellor.
Gross domestic product rose by 0.1% in the fourth quarter of 2024 following zero growth in the previous three months.
This beat the 0.1% drop forecast by City economists and the Bank of England.
However, Ms Reeves has still been despite the slight pick up between October and December last year.
Shadow Chancellor Mel Stride warned that people were “already paying” for the Chancellor’s Budget “with ever-rocketing taxes, hundreds of thousands of job cuts and business confidence plummeting”.
He lashed out at price rises, tax hikes and job losses this year, claiming Ms Reeves was “out of her depth”.
Mr Stride said: “The Chancellor promised the fastest-growing economy in the G7, but her Budget is killing growth.
Mel Stride accused the Chancellor of ‘killing growth’ (Image: Getty)
“Working people and businesses are already paying for her choices with ever-rocketing taxes, hundreds of thousands of job cuts and business confidence plummeting.”
A Treasury spokesman said: “This government is pro-business and pro worker and has committed to engage closely with business and unions as we implement the Employment Rights Bill, so that it works for all.
“Capping the rate of corporation tax, establishing a National Wealth Fund and creating pension megafunds is just the start of our Plan for Change which will get Britain building, unlock investment and support business so we can raise living standards and make all parts of the country better off.”