Britain ‘less attractive than Oman' after Reeves's tax raid on businesses

Yahoo

4 hours ago

Britain has become a less attractive place to do business as Rachel Reeves's tax raid and sky-high energy prices hammer companies.
The UK has slipped to 29th place in the latest World Competitiveness Rankings, meaning the country is less attractive than countries including Oman, the Czech Republic and Saudi Arabia.
Britain is only marginally more appealing than high-tax France, Kazakhstan and Kuwait.
The findings came amid warnings from EY that high energy costs and slow growth are a threat to investment in Britain, and a survey from S&W showing companies are planning more lay-offs due to higher National Insurance contributions.
Jose Caballero, economist at the IMD World Competitiveness Centre, which publishes the index, said rising taxes were adding to Britain's economic problems.
He said: 'The problem is tax policies – higher taxes and public finances. For business efficiency, productivity is an issue, wages are an issue and also the efficiency of the labour force.
'If businesses observe higher labour costs and there is no corresponding increase in output, productivity will lessen.'
The Chancellor increased the taxes paid by bosses on their workers' pay packets from 13.8pc to 15pc in April, and lowered the threshold at which those National Insurance contributions kick in.
The £25bn raid has hit industries that employ a large share of part-time workers particularly hard.
Meanwhile, a survey of business leaders from S&W found most are cutting jobs because of Ms Reeves's tax rises. Just over half either have cut headcount or plan to, while 59pc are cutting staff hours and 51pc have frozen pay.
Fears of a fresh tax raid this autumn are already mounting, with the Chancellor understood to be drawing up plans to increase the levy paid on dividends.
It comes after Ms Reeves agreed spending plans with government departments for the next three to four years, limiting her room to cut expenditure if the public finances deteriorate further.
Paul Johnson, head of the Institute for Fiscal Studies (IFS), last week raised doubts over the viability of the plans set out in the spending review, accusing the Treasury of 'making up numbers'.
Britain ranked 67th out of 69 nations for commercial property costs in the IMD World Competitiveness's ranking and high fuel prices put the UK in 54th place for petrol, a dire sign for any company that needs to move goods around the country.
The findings came as EY separately said Britain attracted 853 foreign direct investment projects last year, marking a 13pc fall compared with 2023's levels. Peter Arnold, EY UK's chief economist, specifically called out energy costs as a problem.
He said: 'Energy prices have added to the cost of doing business in the UK, which has some of the highest energy prices in the developed world.
'Reforming planning rules and accelerating grid connectivity should start to alleviate investor concerns in the industrial and manufacturing sectors, as well as in tech and AI-fuelled industries, where high-growth assets, such as data centres, will require large amounts of energy.'
Business bosses hope the Government's industrial strategy and infrastructure plan, which is expected to be published in the coming weeks, will include steps to lower the cost of energy.
Industries from manufacturing to artificial intelligence are heavy users of energy, and so find the cost of bills particularly painful.
A government spokesman said: 'We are a pro-business Government. We delivered a once-in-a-parliament budget last year that took necessary decisions on tax to stabilise the public finances, including the NHS which has now seen waiting lists fall five months in a row.
'We are now focused on creating opportunities for businesses to compete and access the finance they need to scale, export and break into new markets.'
Switzerland, Singapore and Hong Kong topped the competitiveness table, with the US ranked 13th. The UK fell from 28th spot last year. Venezuela was bottom among all nations surveyed.
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