British companies in a 'state of despondency," accountants say
Daily Business News
British businesses are in a “state of despondency” because of US President Donald Trump’s trade wars and Chancellor Rachel Reeves’s tax rises: the latest quarterly survey of companies’ confidence by the Institute of Chartered Accountants in England and Wales (ICAEW) has plunged into negative territory for the first time since the end of 2022 during former Prime Minster Liz Truss’s ill-fated premiership. A record 56% of businesses said taxation was placing a growing strain on operations, setting a new a record high for the survey, from a previous high of 41% at the end of last year. Alan Vallance, ICAEW CEO, said: “These findings reveal a state of despondency among businesses as they stave off a blizzard of extra outlays, including the rise in employer national insurance. Businesses are the catalyst for growth, but prosperity for some of them remains a pipe dream as long as these barriers remain. Tax worries have never been so prominent, causing record levels of distress for our members for the second quarter running.”
Retailers, however, got a boost from the recent spate of warm weather. Total retail sales increased by 1.1% year on year in March, with 1.6% growth in food sales and 0.6% growth in non-food sales. Helen Dickinson, CEO of the British Retail Consortium, said: “The improving weather made for a particularly strong final week, with gardening and DIY equipment flying off the shelves [and] jewellery and beauty productswere helped by Mother’s Day”.
Donald Trump has ramped up his trade war again, saying last night he would impose new tariffs on imports of pharmaceuticals in the “not too distant future,” after announcing imminent tariffs on semiconductors on Sunday. Nvidia, the world’s most valuable semi-conductor chip maker, announced plans to build its first supercomputer factories in the US, to avoid the tariffs, shortly after. Meanwhile, US Vice-President JD Vance has said there is a “good chance” that Britain and the US can strike a trade deal, telling Unherd: “I think there’s a good chance that, yes, we’ll come to a great agreement that’s in the best interest of both countries”. “We’re certainly working very hard with Keir Starmer’s government” to secure an agreement, he added. “The President really loves the United Kingdom. He loved the Queen. He admires and loves the King. It is a very important relationship. And he’s a businessman and has a number of important business relationships in [Britain]”.
British Steel is under new leadership. Allan Bell has been appointed as interim CEO with immediate effect by Business Secretary Jonathan Reynolds after the Government took over the Chinese-owned firm on Sunday. Lisa Coulson has also been appointed chief commercial officer. Both are long-term employees of British Steel, with more than three decades of collective experience at the company, meaning, Reynolds said, there will be “consistent and professional leadership” at British Steel’s Scunthorpe site. “Our immediate priorities are securing the raw materials we need to continue blast furnace operations, ensuring we have the dedicated personnel to run those furnaces, and maintaining the highest levels of health and safety for our workforce,” Bell said on his appointment, adding: “We look forward to working in partnership with our colleagues in government, the trade unions and the workforce here in Scunthorpe.” Reynolds will today visit the port of Immingham in north east Lincolnshire where those raw materials will be unloaded after arriving from the US. Meanwhile, China has told the UK to “avoid politicising trade co-operation or linking it to security issues, so as not to impact the confidence of Chinese enterprises in going to the UK,” and warned it is “following closely the developments” at British Steel, a comment which led to calls by some MPs to exclude Chinese companies from all the UK’s critical infrastructure. Treasury Minister James Murray dismissed such calls however, telling LBC radio: “China’s not a hostile state but China is a country with whom we have a large important relationship… China’s the second-biggest economy in the world, fourth-biggest trading partner for the UK, there are 450,000 jobs in Britain that depend on exports to China, so we need to engage with them.”
The Chancellor is being warned by Robert Kilgour, founder of Renaissance Care, which operates 19 care homes in Scotland, that he is being forced to close one of them because of her tax hikes, and that her policies will trigger a “tsunami of closures” across the social care sector. Writing in The Telegraph, Kilgour, whose homes employ 1400 people and care for 700 residents, said Reeves’ Autumn Budget has triggered a sharp and unsustainable increase in running costs, and his home closure will be just the “tip of the iceberg” across the UK. He attacked the Government over its “profound lack of support and understanding of the care sector” and warned that the closure will “lead to more beds being blocked and longer NHS waiting lists”. “They have really shot themselves in both feet by doing this,” he added. “Social care was already running on fumes by the time of the July 2024 general election, after many years of government neglect and lack of proper funding and the impacts of the pandemic and the energy crisis. I did not think that the Labour Government would make the social care sector worse and it’s completely shocking that they have done so,” he added.
Despite Deputy Prime Minister Angela Raynor’s pleas for them to accept it and get back to work, refuse workers yesterday rejected a second pay offer from Birmingham City Council yesterday, and Unite trade union sources said other local authorities could be subject to the same industrial action that has left mountains of rubbish piled up in the streets of the UK’s second largest city. “It’s not inconceivable” that walkouts would spread if real-terms wage cuts happened elsewhere, they said. Unite workers are already striking in Sheffield because Veolia (the company to which bin collection is outsourced) will not recognise Unite, and there are conflicts over pay for refuse collectors in Peterborough.
Demand for office space in London is rising again as businesses encourage their workers back into the office after a period of embracing work from home. Around 1.2 million sqm of space was let in Greater London and the South East during the first quarter of 2025, up 39% on the final quarter of 2024, according to estate agents Knight Frank.