With a near-endless stream of ominous rhetoric from the new government, warning of ‘tough decisions’ and a ‘painful’ budget, it is no surprise that this uncertainty has contributed to the recent slump in private sector growth, as reflected in the latest PMI data falling to an 11-month low. The spectre of a stringent budget has significantly dented consumer and business confidence across the UK, with confidence among companies falling to its lowest point since the election.

Concerns over the forthcoming budget’s fiscal strategy have left many firms in a state of limbo, delaying investment and hiring decisions as they await clarity on policy. Speculation is rife that the budget will include tax hikes on capital gains and national insurance, further hampering the weakened private sector. As Reeves sharpens her fiscal scalpel, the government must weigh the trade-offs between immediate fiscal needs and long-term economic vitality, as a tax hike today could be a growth gamble tomorrow.