(Bloomberg) — The UK government is in danger of losing the trust of corporate leaders if it fails to mitigate the impact of last month’s budget, the chair of the country’s most powerful business lobby said.

Rupert Soames, who joined the Confederation of British Industry in February, said businesses were caught unawares by increased employment costs being introduced by the Labour government, and could turn against it in the next six to 12 months. “That jelly, once it sets, will be really hard to shift,” Soames said in an interview at the CBI’s annual conference in London. 

Chancellor of the Exchequer Rachel Reeves increased taxes by more than £40 billion ($50 billion) last month, most of which will come from a rise in national insurance, a payroll levy. Businesses were disappointed by the increase, but this could be mitigated by changes to other measures, such as the employment bill, apprenticeship levy, and rates reform. 

The trust isn’t lost yet, but Labour has “now clearly got some ground to regain,” Soames said. “When in opposition, the government did a really good job of convincing people they do understand.”

The government can’t get companies to grow by “decree,” Soames said. “It can cajole, it can encourage, but it can’t force people to do it.”

‘Damage Control’

His comments followed speeches by and discussions with business leaders and politicians including the leader of the opposition, Kemi Badenoch. 

Salman Amin, chief executive officer of snacks company Pladis Foods Ltd., said Britain had become a less attractive place to do business. “It’s becoming harder to understand what the case for investment is,” said Amin, whose company makes McVitie’s biscuits and Jacob’s crackers.

Earlier on Monday, the CBI released the results of a survey that showed British companies are in “damage control,” with nearly half planning to cut jobs after the tax-rising budget. 

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