Blow to Rachel Reeves as £14.8bn to be wiped from UK economy due to inheritance tax reform

The study, conducted by CBI Economics for Family Business UK and supported by 32 trade associations, represents the most thorough examination yet of how family business owners will respond to the policy changes announced in the Autumn Budget.

Furthermore, the research forecasts a £1.87billion net fiscal loss to government, undermining the Treasury's revenue expectations from the controversial measures.

The analysis examined businesses and farms across all sectors, revealing that investment is likely to plummet most severely in Yorkshire and the Humber and the East of England, both facing 17 per cent declines for businesses affected by BPR changes.

Scotland, the North West and North East of England could see the steepest job cuts at 10 per cent. For those impacted by APR changes, Northern Ireland, the Midlands and the North East of England face the sharpest investment reductions at 17 per cent. Employment could fall by between 10 per cent and 12 per cent across the North West and North East.

The constituency-level analysis identified Cornwall and Aberdeenshire as particularly vulnerable, with five of the ten most severely affected constituencies located in Cornwall, including St Austell & Newquay, North Cornwall, South East Cornwall, St Ives and Cambourne & Redruth.

Family business owners have already begun taking drastic measures to mitigate the policy's impact. Over 60 per cent of businesses anticipate cutting investment by more than 20 per cent, with average reductions of 15.8 per cent for APR-affected businesses and 15.5 per cent for those facing BPR changes.

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Nearly a quarter of businesses have already reduced their workforce due to the inheritance tax changes. Approximately one in five are considering downsizing operations, whilst up to 12 per cent are contemplating selling their businesses entirely.

Community support is being withdrawn, with 15 per cent of BPR-affected businesses and 12 per centof APR-affected businesses cutting charitable donations or community activities, threatening vital local initiatives that depend on family business philanthropy.

The economic damage spans every major sector, with Accommodation and Food Services, Construction, and Agriculture and Horticulture all facing 17 per cent investment cuts. Manufacturing and Real Estate activities anticipate 16 per cent reductions, whilst Retail and Wholesale expect 15 per cent declines.

Neil Davy, the CEO of Family Business UK, warned: "This latest research shows just how far-reaching, and immediate, the impact of these policy changes is. No industry, sector, region or parliamentary constituency will be immune."

He added: "In construction, services, manufacturing, tourism, transport, agriculture and horticulture, family business owners are responding to the changes to BPR and APR by tearing up long-term plans to invest in their businesses, their employees and the communities in which they are based."

Industry leaders have issued stark warnings about the policy's consequences, including Deborah Walker, Director General of the British Holiday & Home Parks Association.

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She shared: "The proposed changes to Business Property Relief will mean many much-loved, family-run holiday and residential parks across the UK will have to be broken up and sold off. This is already having a negative impact on investment in many rural and coastal communities."

Steven Mulholland, the CEO of the Construction Plant-hire Association, called the government's approach "deeply irresponsible" for proceeding without a proper impact assessment.

Kate Nicholls, the chief executive of UKHospitality, warned that family-run hospitality businesses face potential costs running into millions, urging the Chancellor to "rethink these proposals and begin a full consultation."