A third of senior investors and corporate executives would consider pausing, reducing or stopping all UK investment over the next 12 months if business taxes rise sharply, according to a survey published ahead of John Healey’s first Budget on 28 October.
The research, carried out by YouGov for the public affairs firm Teneo, questioned 100 managing directors, vice-presidents and chief officers at large financial and corporate organisations in July. Respondents collectively control more than £30trn of assets, and each is responsible for at least £5m of annual capital allocation within their organisation.
Thirty-two of the 100 said a “sharp tax rise” on companies or investors would lead them to “consider pausing, reducing or stopping all UK investment over the next 12 months”.
Attractiveness to investors
Some 58 per cent said the UK had become less attractive to investment decision-makers over the past five years, compared with 28 per cent who said it had become more attractive. A total of 78 per cent said ministers were not giving them a strong enough reason to commit capital.
The UK was still regarded as an attractive place to invest and do business by 75 per cent of respondents.
Iain Dey, senior managing director and co-head of UK financial communications at Teneo, which commissioned the research, said the results showed Britain was “losing ground” in the competition for investment.
“Investment is central to economic growth. It finances new businesses, infrastructure, technology and research; creates and safeguards jobs; and raises productivity,” he said.
He added: “Their message is clear. The UK hasn’t stopped being attractive to investors, but it is losing ground. Their warning on tax is clear: a sharp rise risks sending capital elsewhere.”
The Chancellor is preparing to increase taxes on banks, a move backed by some think tanks and Labour MPs, to help fill a hole in the government’s finances caused by rising borrowing costs. The Budget will also involve extra spending, including support for poorer households with energy bills and funding to reduce homelessness.
Healey is also expected to announce that online marketplaces such as Amazon, eBay and Temu will for the first time be made responsible for collecting tax owed by retailers selling on their platforms. The measure is set to raise up to £1bn for the Treasury, mainly by targeting foreign sellers who exploit lax rules and enforcement to avoid paying VAT on sales.
Investors back closer EU ties
The survey also found support among investors for Prime Minister Andy Burnham’s plan to reshape relations with the European Union, with 92 per cent favouring closer ties. About 47 per cent said the UK should seek to rejoin the EU as soon as possible, and a further 45 per cent favoured greater alignment without formal membership of the 27-country bloc.
Some ministers want Britain to rejoin the EU, while others think the UK should seek to participate in the customs union or single market.
A parallel YouGov survey of 100 MPs found that 27 per cent anticipated that investors wanted the UK to rejoin. The MPs also underestimated how far political instability had undermined the UK’s appeal to financiers, the research found.
Baroness Mattinson, a former adviser to Sir Keir Starmer and a senior adviser at Teneo, said there was a “profound” difference. “MPs tend to underestimate both the appetite for rejoining and just how important political stability is to investment decision-makers,” she said.
The Institute for Public Policy Research think tank published a report today arguing that the UK lacks the scale to protect its prosperity, security and democratic institutions alone. It said securing a democratic mandate for rejoining should become a “medium-term objective” for the government.
Relations between Labour and some business groups have come under strain in recent years. The increase in national insurance contributions for employers, together with rises in the living wage and legislation to strengthen workers’ rights, has led to frustration and warnings of job losses.
Last week, retail bosses were expected to use a Downing Street summit to warn the Chancellor that further tax rises on shops would push up prices and cut jobs. Forecasts from the International Monetary Fund show the UK tax burden rising faster than in any other Western economy.
The Treasury was contacted for comment.
Amy Ingham
Amy Ingham is a reporter at Business Matters, covering UK business news with a focus on breaking news, business policy, late payments and insolvency. She joined the magazine in 2026 after completing the NCTJ Diploma in Journalism at Harlow College’s journalism school. Her recent reporting includes British Steel’s nationalisation and its impact on SME suppliers, the decline in late payments by large firms, and Insolvency Service director disqualifications. Reach her at aingham@cbmeg.co.uk.
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