Rachel Reeves risks creating a backlash from small firms in her first Budget this week with  plans to increase employers’ national insurance contributions that will raise £20 billion.

The Chancellor is facing claims that this will harm many small firms that are already struggling.

Bridget Phillipson, the UK Education Secretary, refused to say on Sunday whether a small business owner earning £13,000 a year was a “working person” who Labour has said it would protect from tax rises.

Craig Beaumont, executive director of the Federation of Small Businesses, said those who would be hit included some of the “hardest-working people imaginable”.

In a speech today, Prime MinisterSir Keir Starmer will say the budget is a choice between the “tough decisions” needed for long-term economic growth and improved public services over the “populist chorus of easy answers”.

He will say that there is a need to be “realistic about where we are as a country”, indicating that additional investment will require tax rises. 

He will add: “Working people [have] had enough of slow growth, stagnant living standards and crumbling public services. They know that austerity is no solution. We choose a different path: honest, responsible, long-term decisions in the interests of working people. It’s stability that means we can invest, and reform that will maximise that investment.”

Ministers are also believed to be looking to increase the rate of capital gains tax on the sale of shares, but will temper the rise to avoid spooking wealthy individuals into moving their assets.

Figures out this morning showed that business confidence fell to a four-month low this month. The Lloyds Bank business barometer shows confidence slipped by three points to 44% (four points lower in Scotland) on the back of the warnings of tax rises.

Corporate announcements this week focus on two oil majors and despite ongoing conflicts in the Middle East and Ukraine, oil and gas prices remain subdued.

Shares in BP are down by more than a quarter over the past year and those in Shell by around 10% and this makes the timing of the third-quarter results from both BP and Shell this week particularly interesting, says AJ Bell.

In a trading update earlier this month BP flagged lower oil and gas production, weaker refining margins, lower income from its oil trading operations and higher net debt, as well as the impact of weaker hydrocarbon prices, for the third quarter compared to the second.

Shell increased its forecast for hydrocarbon production from its upstream operations but warned that refining margins and profits from its chemicals and refined products business would both be down compared to the second quarter.

Lower capex and disposals have seen both BP and Shell substantially reduce their net borrowings. At the end of Q2, BP’s net debt was $21 billion and Shell’s $37bn.

If the current run rates for dividends and buybacks are maintained, BP is expected to return $12bn to its investors in 2024 and Shell $21bn, or 14% and 10% of their current stock market capitalisations, respectively.

DIARY

Monday 28 October

• In Europe, quarterly results from Philips
• In the USA, quarterly results from Waste Management, Ford, ON Semiconductor, F5, Amkor and Rambus

Tuesday 29 October

• In Edinburgh, Call for Action conference on economy
• Full-year results from YouGov
• First-half results from C&C
• Quarterly results or trading statements from BP, HSBC, Pearson and Santander
• British Retail Consortium UK shop price index
• UK mortgage approvals
• In the US, quarterly results from Alphabet, Visa, AMD, McDonald’s, Pfizer

Wednesday 30 October

• First-half results from Aston Martin Lagonda
• Quarterly results or trading statements from Standard Chartered, Next, Glencore and Computacentre
• UK Budget
• In the USA, quarterly results from Microsoft, Meta Platforms, Eli Lilly, Caterpillar, Amgen, Starbucks

Thursday 31 October

• Trading statements from Smith & Nephew, Shell
• Nationwide house price index
• EU inflation
• US weekly unemployment claims
• In the US, quarterly results from Apple, Amazon, Mastercard

Friday 1 November

• Purchasing managers’ indices (PMIs) for Japan, Asia, Europe, the UK and USA
• US non-farm payrolls, unemployment and wage growth
• US car sales