Britain is stuck in a growth ‘doom loop’. Public spending has ballooned, taxes are at a 70-year high and the same pattern repeats each year. The result is a country that works harder, pays more and gets less. It’s a policy environment that is hitting business hard at all levels, and is toxic for young entrepreneurs and start-ups trying to get on, get started and get ahead.
There is hard evidence that shows that the environment for business – and for jobs – is deteriorating, with regulatory burdens, higher taxes and talent drain. Without structural support, the UK risks losing its competitive edge as young entrepreneurs and start-ups move aboard for better opportunities.
Recent polling commissioned by The Jobs Foundation has revealed historic pessimism among family businesses, the firms that employ millions and sustain local communities. In a survey of 1,150 family firms and farms, a striking 78% of owners say they are pessimistic about the UK economy in 2026, and only 17% would advise a young entrepreneur to start a business here today. Respondents are five times more likely to say the 1970s offered a better tax and regulatory climate than the present decade.
This sombre mood is echoed in confidence measures. The Institute of Chartered Accountants in England and Wales’ Business Confidence Monitor shows business sentiment has plunged into double-digit negative territory for the first time in three years, with the index sinking to -11.1 in Q4 2025, down from -7.3 just a quarter earlier. A record 64% of firms said the tax burden was a growing challenge, the highest proportion in the monitoring series, while more than half said regulatory costs were holding them back.
And the British Chambers of Commerce Quarterly Economic Survey paints a similar picture: only 46% of firms expect turnover to rise over the next year, the lowest level in three years, while 24% expect turnover to fall, with nearly half of businesses cutting or freezing investment plans. Tax remains the top concern, cited by 63% of firms, and labour costs, driven by higher National Insurance and wage pressures, remain the single biggest cost pressure for 72% of respondents.
None of this is abstract. These data reflect a real disconnect between political aspiration and business reality. Labour’s decision to hike employers’ National Insurance, effectively a jobs tax, comes at a time when confidence is already fragile, investment is slowing and hiring intentions are weak.
Further to this, startup funding in the UK fell to £16.2 billion in 2024, a 35% drop from 2022, marking the lowest level since 2020. Access to venture capital is tighter compared to hubs like San Francisco, leading to a ‘brain drain’ of talent and capital. Access to government funding is characterised by an overtly bureaucratic, costly and time-consuming approach – startups must also negotiate a complex political environment between different departments and agencies.
When nearly eight in 10 employers are pessimistic about the economy and fewer than a fifth would recommend Britain as a place to start a business, we should take note.
This is precisely why we have been calling for an ‘end to the doom loop’ at Next Gen Tories: a pragmatic agenda which ends the cycle of low growth and high taxes, reforms planning and regulatory frameworks and rewards aspiration. This speaks directly to the challenges businesses themselves are naming. It argues for cutting costs, restoring fiscal credibility and reforming the tax system so that work and enterprise are genuinely rewarded, not penalised.
Backing young entrepreneurs and startups is about giving them realistic opportunities to create jobs, innovate and build the future. But when business confidence is low, turnover expectations shrink and investment plans are shelved, that future is put at risk.
What firms are telling policymakers, from family businesses to SMEs across sectors, is simple and stark: lower energy costs, cut business taxes, reverse punitive employer National Insurance hikes and slash burdensome regulation. Those are the levers that will restore confidence and unlock growth.
For a Conservative route to recovery, there is an opportunity to champion a pro-growth, pro-enterprise agenda, grounded in common sense. Ending the growth doom loop is about restoring national confidence and genuinely backing the next generation of young entrepreneurs and founders – not just with rhetoric, but with real results.
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