by Business leaders have hit out at Rachel Reeves and Labor for “hiding behind them” amid record tax rises. The Chancellor has vaguely warned that the £25 billion rise in National Insurance contributions could cut employers’ jobs and close parts of their businesses.
Although Labor has promised not to raise income tax, national insurance or VAT for individuals, the pressure is on businesses. During BBC Question Time, a Guildford business owner took on Chief Secretary to the Treasury, Darren Jones, saying: “I employ 60 people and you promised them you wouldn’t tax them.
“You put them on me, which makes me unable to make very difficult decisions and you made me the worst.
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“How could you hide from the business owners of this country, and do that to us, when you promised the voters that you weren’t going to raise taxes?” The entrepreneur Sir Tom Hunter added his voice to the debate, saying: “There is no economy in the world that has ever taxed its way to economic growth.”
He recounted the situation of a friend with a £40 million turnover business who had an extra £1.3 million in costs due to National Insurance and the new living wage, which could close shops, reports the Express.
“That means it’s going to lay off about 90 people. Let’s assume that half of them will find a job elsewhere. That’s 45 people who aren’t paying tax, who aren’t paying their NI, and even worse, who looking for benefits now that it doesn’t grow.”
Another employer, Janet Garcia, expressed her concerns to the Labor politician: “I’m a bit paralyzed with a lack of confidence and now I have to make decisions about how much of my workforce I keep in the UK or not.”
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Ms Reeves admitted that her decision to increase employers’ national insurance contributions (NICs) could affect pay growth for private sector workers as companies try to offset the cost of the tax rise. The primary tax increase was the £25.7 billion change in employers’ NICs, although the actual revenue generated for the Exchequer will be around £16.1 billion by 2029/30 as businesses cap pay rises , hours are reduced and profits are reduced and public sector employers are compensated. in their budgets for change.
Economic experts labeled the increase “tax on working people” which “definitely” reflected in their wages. When asked about the implications of the move, the chancellor told the BBC: “I said it will have consequences.
“It will mean that businesses will have to absorb some of this through profits and it will probably mean that wage rises may be a little less than they would otherwise be.”
Market unease over the Chancellor’s plan for a significant borrowing spree has led to an increase in the cost of government debt.
Government borrowing costs rose on Thursday afternoon, with bond yields hitting their highest level in a year following Labour’s Autumn Budget announcement. The interest rate on the 10-year government bond rose sharply to 4.568% by Thursday afternoon, the highest since August 2023.
UK government bonds, or gilts, see their yields rise as prices fall. This increase in results came after Chancellor Rachel Reeves unveiled her Autumn Budget on Wednesday.
Reeves has announced almost £70 billion in extra annual spending, which will be funded by tax increases targeting businesses and additional borrowing. The Office for Budget Responsibility (OBR) described the move as “one of the biggest fiscal releases of any fiscal event in recent years”.
The Conservatives criticized the Budget, calculating that it would mean an extra £2,237 in taxes per year for the average working family, amounting to £9,700 over five years. Defending her financial strategy, Ms Reeves said: “This Budget was about wiping the slate clean after the previous government’s mismanagement and cover-up.
“I had to make big choices. I don’t want to do a Budget like this ever again, but it was necessary to put our public finances and public services on a stable path. I said it will have consequences.
“It will mean that businesses will have to absorb some of this through profits, and it will probably mean that wage rises may be slightly less than they would otherwise be.
“But overall the Office for Budget Responsibility predicts that household incomes will increase during this Parliament. That’s a world away from the last Parliament, which was the worst Parliament ever for living standards.”
Government borrowing costs soared to their highest level in a year, and sterling was the winner, falling by one-third of a percent against the dollar. Economists are warning that the government may have to find an extra £9 billion after next year to prevent spending cuts on vulnerable departments.
Despite a rapid rise in day-to-day spending, growth is expected to slow to 1.3% from 2026.
