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Labour is facing a drop off in confidence among business leaders amid plans for tax rises and improvements to workers’ rights, according to a survey.

The Institute of Directors (IoD) had noted a leap in optimism in July among its membership as the new government came to power.

But its latest economic confidence index showed a slump from a three-year high, falling into negative territory in August.

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Major indicators to show the biggest declines included business investment and employment.

Others to fall back were expectations for revenue, exports and wages.

Recent data has shown the UK economy to have the fastest economic growth in the G7 over the first half of the year.

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Prime minister Sir Keir Starmer and his chancellor Rachel Reeves have made securing growth the “top priority” but complain their plans are being complicated by a legacy £22bn black hole in the public finances.

“Tough choices” they have already announced, ahead of the 30 October budget, have included cutting winter fuel payments for all pensioners.

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Chancellor quizzed over tax rises

Critics argue the tough choices include caving in to union demands to avert strikes, racking up a £9bn bill across public sector pay awards.

Commentators widely expect hikes to wealth taxes, such as capital gains tax, in the budget as it would chime with Sir Keir’s warning last month that those with the broadest shoulders would face the greatest burden.

An Employment Rights Bill is also due to prohibit zero-hour contracts and ban so-called fire and rehire tactics.

One particular sector to raise fears of an own goal was energy.

Industry body Offshore Energies UK claimed government plans to increase a windfall tax on North Sea oil and gas producers would lead to a £12bn fall in revenue to the state, due to weaker production and investment.

The IoD survey findings represent a major turnaround in opinion.

Ms Reeves secured a strong relationship with business in the run up to the election as firms ran out of patience with the Conservatives, long complaining of a lack of communication and strategy.

IoD chief economist Anna Leach said of its findings: “It’s disappointing to see last month’s welcome uptick in business leader confidence snuffed out over the summer.

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Reeves’ black hole claim ‘not credible’

“It is notable that the sharpest drops in our economic measures are in investment and headcount expectations, whilst other measures have moved to a lesser degree, albeit in a likewise negative direction.

“The newsflow in recent weeks on employment rights and autumn tax rises has dented confidence in the environment for business in the UK.

“As we head into a busy autumn, we are calling on the government to take time to get policy design right for the long-term and deliver the stable tax and policy framework needed to drive business confidence and investment.

“Further clarity on the industrial strategy and the business tax roadmap, in conjunction with more progress in engaging with business on workers’ rights, would be welcome.”

The findings chime with warnings that the budget should not seek to rake in cash at the expense of the economy.

Former president of the CBI, the Cobra beer founder Lord Bilimoria, said fears of tax increases would spark an exodus.

Read more:
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He called on the government to concentrate on growth, calling any rise in capital gains tax “a short-sighted move”.

“Investors are not going to come here if you keep putting up taxes,” he told the Daily Mail.

“It will not bring in more money; in fact, money will fly from this country.”

His comments were echoed by lastminute.com co-founder Brent Hoberman, who told the newspaper it “does not make sense to scare off business investment”.

Watch Business Live with Ian King at 11.30am and 4.30pm on Sky News.

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A pub a day to close this year, industry body warns as it calls for cut to tax burden

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A pub a day to close this year, industry body warns as it calls for cut to tax burden

An industry body has warned that the equivalent of more than one pub a day is set to close across Great Britain this year.

According to the British Beer and Pub Association (BBPA), an estimated 378 venues will shut down across England, Wales and Scotland.

This would amount to more than 5,600 direct job losses, the industry body warns. It has called for a reduction in the cumulative tax and regulatory burden for the hospitality sector – including cutting business rates and beer duty.

The body – representing members that brew 90% of British beer and own more than 20,000 pubs – said such measures would slow the rate at which bars are closing.

BBPA chief executive Emma McClarkin said that while pubs are trading well, “most of the money that goes into the till goes straight back out in bills and taxes”.

“For many, it’s impossible to make a profit, which all too often leads to pubs turning off the lights for the last time,” she said.

“When a pub closes, it puts people out of a job, deprives communities of their heart and soul, and hurts the local economy.”

She urged the government to “proceed with meaningful business rates reform, mitigate these eye-watering new employment and EPR (extended producer responsibility) costs, and cut beer duty”.

“We’re not asking for special treatment, we just want the sector’s rich potential unleashed,” she added.

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The government has said it plans to reform the current business rates system, saying in March that an interim report on the measure would be published this summer.

From April, relief on property tax – that came in following the COVID-19 pandemic – was cut from 75% to 40%, leading to higher bills for hospitality, retail and leisure businesses.

The rate of employer National Insurance Contributions also rose from 13.8% to 15% that month, and the wage threshold was lowered from £9,100 to £5,000, under measures announced by Rachel Reeves in the October budget.

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Trump fires tariff threats at more nations as EU ‘ready for all scenarios’

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Trump fires tariff threats at more nations as EU 'ready for all scenarios'

Donald Trump has revealed a list of more nations set to face delayed ‘liberation day’ tariffs from 1 August.

He has threatened tariffs of 30% on Algeria, 25% on Brunei, 30% on Iraq, 30% on Libya, 25% on Moldova and 20% on the Philippines. Sri Lanka was later told it faced a 30% duty.

Letters setting out the planned rates – and warning against retaliation – are being sent to the leaders of each country.

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They were the latest to be informed of the president‘s plans after Japan and South Korea were among the first 14 nations to be told of the rates they must pay on their general exports to the US from 1 August.

The duties are on top of sectoral tariffs, covering areas such as steel and cars, already in place.

Mr Trump further warned, on Tuesday, that a 50% tariff rate on all copper imports to the US was looming.

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He has also threatened a 200% rate on pharmaceuticals and is also expected to take aim at all imports of semiconductors too.

The European Union, America’s largest trading partner in combined trade, services and investment, is expected to get a letter within the next 48 hours unless further progress is made in continuing talks.

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Who will be positively impacted by the UK-US trade deal?

The bloc, which Mr Trump has previously claimed was created to “screw” the US, has been in negotiations with US officials for weeks and working to agree a UK-style truce by the end of the month.

The EU has retaliatory tariffs ready to deploy from 14 July but it is widely expected to delay them until such time that any heightened US duties are imposed.

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Trump to visit UK ‘in weeks’

It remains hopeful of a deal in the coming days but European Commission president Ursula von der Leyen told the European Parliament: “We stick to our principles, we defend our interests, we continue to work in good faith, and we get ready for all scenarios.”

While the UK’s so-called deal with Mr Trump is now in force, it remains unclear whether steelmakers will have to pay a 50% tariff rate, deployed by the US against the rest of the world, as some final details on an exemption are yet to be worked out.

The rate is currently 25%.

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Nvidia wins race to become first $4trn listed company

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Nvidia wins race to become first trn listed company

Nvidia has become the first stock market-listed company to achieve a value of $4trn.

Its share price rose by more than 2% at the market open on Wall Street to reach the milestone moment.

It was achieved just over a year since Nvidia overcame the $3trn barrier and overtook Apple, in market cap terms, in the process.

The AI-focused chipmaker has been the darling of Wall Street for many years.

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The value of its shares has risen by 409,825% since its market debut in 1999.

Its status has been cemented thanks to the rush for AI technology – suffering several wobbles along the way – but nothing significant when you refer to the percentage rise of the past 26 years.

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The most recent pressures have come from the emergence of the low-cost chatbot DeepSeek and concerns for global AI demand as a result of Donald Trump’s trade war hitting growth.

Financial markets have been taking a more risk-on approach to the trade war since the delays to “liberation day” tariffs in April.

It’s explained by a market trend that’s become known as the TACO trade: Trump always chickens out.

Nvidia hits $4trn valuation
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The milestone is reported by Sky’s US partner CNBC, seen on screens at the New York Stock Exchange. Pic: Reuters

It has helped US stock markets post new record highs in recent days.

The wave of optimism is down to the fact that the president is yet to follow through with the worst of his threatened tariffs on trading partners.

Corporations are also yet to report big hits to their earnings – a fact that is also propping up demand for shares.

If Mr Trump does go all-out in his trade war, as he has now threatened from 1 August, then that $4trn market value for Nvidia – and wider stock markets – could be short-lived, at least in the short term.

But market analysts believe Nvidia’s value has further to go.

Read more from Sky News:
Greater risk to UK economy from Trump tariffs, BoE warns
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Matt Britzman, senior equity analyst at Hargreaves Lansdown, said of its meteoric rise: “Once known for powering video games, NVIDIA has transformed into a foundational player in AI infrastructure.

“Its high-performance chips now drive everything from natural language processing to robotics, making them essential to training and deploying advanced AI models.

“Beyond hardware, its full-stack ecosystem – including software platforms and developer tools – helps companies scale AI quickly and efficiently. This end-to-end approach has positioned Nvidia as a cornerstone in a market where speed, scalability, and efficiency are critical.”

He added: “The key question is where it goes from here, and while it might seem strange for a company that’s just passed the $4trn mark, Nvidia still looks attractive.

“Growth is expected to slow, and it’s likely to lose some market share as competition and custom solutions ramp up. But trading at a relatively modest 32 times expected earnings, and over 50% top-line growth forecast this year, there’s still an attractive opportunity ahead.

“For investors, it remains a compelling way to gain exposure to the AI boom – not just as a participant, but as one of its architects.”

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