Suffolk companies are increasingly worried that a hike in tax on their profits will be on the cards when the new chancellor delivers her first Budget on October 30, according to a survey.

Suffolk Chamber’s Quarterly Economic Survey (QES) shows concern about corporation tax occupied the minds of 62% of respondents - beating anxiety about inflation (49%) for the first time in many years.

Labour's Rachel Reeves says she has discovered a £22bn "black hole" in the public finances since taking office - and many fear that election pledges ruling out increases on workers' taxes mean that tax on companies will be in her sights to fill it.

Corporation tax is the tax that companies pay on their profits. The main rate is 25% - but businesses earning profits of less than £50k pay 19%. Those earning profits of £50k to £250k qualify for "marginal relief" which increases the percentage gradually.

Business rates are also increasingly occupying companies' minds with 32% worried about it - twice the amount recorded in the second quarter of 2024. 

The latest QES - which covers the three months to September 2024 and charts trading activity and sentiment of businesses - was largely dominated by quarter-on-quarter falls. However, most measures are still in positive territory.

“Across the last two years or so, for every quarter of improving trading activity and sentiment, the following one inevitably sees most of those gains being at least partially reversed," said Suffolk Chamber's Economy Group chairman Matt Moss.

"Sadly, the latest results from Suffolk Chamber’s Quarterly Economic Survey (QES) is further confirmation of the stubborn endurance of this snakes and ladders mode.”

Manufacturers reported declines across all activity measurements - domestic sales (down by 6%), domestic orders (down 2%), export sales (down 62%), export orders (40% fall) and job growth trends (24% fall).

Service companies saw falls across three of measures - domestic sales (18% down), domestic orders (19% fall) and job growth trends (14% fall). However, indices rose for export sales (21% up) and export orders (19% up).

Projected cash flow fell for both manufacturers and service businesses, by 13% and 19% respectively.

The two sectors differed in key future business measures with manufacturers reporting improvements across investment in plant and machinery, investment in training, confidence in improving turnover and profitability and best use of available capacity – while service companies logged declines across all of these.

Paul Simon, Suffolk Chamber’s head of public affairs, said: “Our ongoing worries about Suffolk’s two-speed economy have just gotten worse in light of this data.

"The county’s recovery certainly ebbs and flows from one quarter to another in many cases, although there is enough positive news to encourage us all, not least the recent fall in headline inflation to 1.7%.

“It is vital that Rachel Reeves’ Autumn Statement both supports businesses to grow by locking in a fairer taxation system that rewards risk-taking and growth and gives firms the reassurance of a clear Government strategic direction across, including future trading agreements and infrastructure spend, including the upgrades to Ely and Haughley Junctions and boosted resilience for the A14 in Suffolk, especially in and out of the Port of Felixstowe.”

Suffolk Knowledge, part of Suffolk County Council, provides the analysis for the QES.

(Image: George Clerk)