Eurotunnel, the operator of the Channel Tunnel, has paused its projects in the UK, claiming that “unsustainable” tax levels have made any future investment “unviable”.
The company said it had been informed that its trading rates would increase by around 200% starting next year.
He attacked the government, arguing that higher costs were “clearly contrary” to ambitions to grow the economy and increase investment.
The Treasury said it would support businesses “most affected” by the tax rises and would continue discussions with affected industries over such concerns.
The Channel Tunnel blast comes days before next week’s Autumn Budget, where Chancellor Rachel Reeves will set out the government’s tax and spending plans.
Speaking to the BBC, Channel Tunnel chief executive Yann Leriche said: “All our investments, all our plans are becoming unsustainable.
“As you know, business rates are a property tax. And our property, the Channel Tunnel, has not changed. It is still the same tunnel, the same terminal, the same trains. Everything is the same.
“And so, facing such an increase… is a real problem for us. Because we know that in the railway we invest for the long term.”
The potential 200% increase in business rates for Channel Tunnel is the result of new calculations by the Valuation Office Agency (VOA), which provides the government with property valuations and advice used to set taxes and benefits.
Leriche said that while discussions were ongoing, this could see his trading fees rise from £22m to £65m.
A Eurotunnel spokesperson said such an increase in business rates, along with other taxes, could put its total tax bracket at around 75% of UK profits.
VOA told the BBC that the body “does not determine commercial rates” and that “next year’s liability has not yet been confirmed.”
“This unparalleled and unsustainable level of taxation makes any future investment in the UK unviable,” Channel Tunnel said.
“Therefore, it is impossible to develop new services, create jobs and devote ourselves to what is necessary for the long-term development of our activities.”
The company said it had “no choice but to freeze our future investments in UK rail assets, starting in 2026.”
The BBC has asked Channeltunnel what investments it has frozen. The Financial Times reported that its chief executive, Yann Leriche, told the newspaper that he had scrapped plans to reopen a cargo terminal in Barking and operate a new direct cargo service from Lille.
The Channel Tunnel is an underwater tunnel that links the south of England and the north of France. Nicknamed “Chunnel”, it comprises three tunnels, two railway tunnels used for freight and passenger trains, and a service tunnel.
The link between Folkestone and Calais is operated by Eurotunnel.
Independent company Eurostar, the Channel Tunnel’s largest customer, operates passenger services through the tunnel between London and other European cities on the continent, including Paris, Brussels and Amsterdam.
A VOA spokesperson told the BBC it had engaged with Eurotunnel and its advisers “on multiple occasions over the past eighteen months to discuss their assessment and fully explain our approach”.
“These discussions are ongoing and we are committed to continuing constructive engagement.”
The spokesperson added that Eurotunnel could formally challenge the assessment.
Ahead of the budget, Channel Tunnel called on the government to “provide certainty on commercial rates”.
The company has not been the only one to issue warnings to the chancellor, as supermarket bosses say part of the government’s business rates reforms pose a problem for their industry.
Business rates are a tax on non-domestic property such as shops, pubs and offices.
Reeves is expected to confirm the fees businesses will have to pay in the Budget, along with further details, which will come into force in April 2026.
The Treasury said in response to Eurotunnel’s comments that it did not comment on “speculation about future changes in fiscal policy”.
He said that once he understood the “full” picture of the revaluation, he would be in a position to “make final decisions” on support.
