Confidence among business leaders in the prospects for the UK economy nosedived towards levels not seen since the coronavirus pandemic during November, as fears over rising national insurance bills plague firms.

The Institute of Director’s monthly Economic Confidence index fell to -65 in November, down from -52 during October in its fourth consecutive monthly fall.

This is the second lowest reading of the index recorded since it began in July 2016, being topped only by a -69 in April 2020, and came after the Autumn Budget at the end of October.

“Far from fixing the foundations, the Budget has undermined them, damaging the private sector’s ability to invest in their businesses and their workforces,” said Anna Leach, chief economist at the Institute of Directors.

Included in the Budget was a hike to the national insurance paid by companies, with 83 per cent of respondents stating they expected their bills for the tax to increase.

Half of business leaders said the increased tax would eat into wage increases, with 44 per cent expecting an increase in prices and 43 per cent forecasting a decline in employment.

The shift has led employment tax to be reported as the second biggest concern for business leaders, overtaking skills and labour shortages and being cited as a problem by two thirds of members, almost double the proportion of August.

Economic conditions continue to be the most significant factor identified by business leaders for having a negative impact on their organisations, rising from 56 per cent in August to 73 per cent.

“There’s now a significant risk of growth stalling across the private sector due to the extent of the reset required by business,” added Leach.

Business leaders’ confidence in their own organisations also fell from +2 in October to -7 in November, the lowest since -8 in May 2020.

This was one of several figures to reach their lowest since May 2020, including investment intentions (falling from -15 to in October -27) and headcount expectations (-4 to -24)

Meanwhile, revenue expectations from business leaders fell to +4 in November from +15, while wage expectations dropped to +21 from +47, both hitting their lowest since late 2020.

Finally, export intentions declined from +6 in October to +2, the lowest value since the measure was introduced in April last year.

“We urge the government to look for opportunities to ameliorate the negative impacts of the Budget and other policy measures, so that businesses are able to deliver the jobs and investment needed,” said Leach.

“The flurry of announcements expected in the Spring – spanning industrial strategy, infrastructure and tax reform – will be an important opportunity to reposition the growth narrative more positively.”