Business leaders have warned Chancellor Rachel Reeves that price hikes and job cuts are inevitable following Labour's Budget, accusing her of failing to grow the economy. The bosses of some of the UK's biggest firms said the government did not engage with them before the Budget, and a survey found two-thirds of business chiefs believe it will make Britain less attractive to investors.
Despite a manifesto pledge not to increase taxes for working people, Reeves raised employers' national insurance contributions (NICs) from 13.8% to 15% and lowered the threshold at which employers start paying the tax from £9,100 per year to £5,000. Firms warned they would be forced to “tighten their belts,” with some facing a sevenfold rise in their bills.
John Longworth, chair of the Independent Business Network, described the Budget as “anti-growth,” while Dr Roger Barker of the Institute of Directors said the NIC increase takes “no account of whether a business is profitable or not.” The British Retail Consortium (BRC) said in a draft letter to Reeves that job losses are “inevitable” and higher prices “a certainty.”
Confederation of British Industry chief executive Rain Newton-Smith added: “There’s a lot of disquiet in the business community on whether this government is solidly focused on that growth mission.” She noted that business investment is expected to weaken due to Budget decisions. The backlash comes as Reeves prepares to unveil pension “megafunds” to unlock investment in UK businesses and infrastructure.
Supermarkets face a significant hit, with Morgan Stanley research showing Tesco could face a £1bn impact. Pub group Fuller's revealed a £3 million hit from the NIC increase and, combined with a 6.7% minimum wage hike, faces an extra £8 million bill next year. Chief executive Simon Emeny said: “We won’t be able to afford to just take the £8 million hit to the bottom line, so there will be price increase.”
