UK economy on edge: Rachel Reeves tax raid leads to new hires | Personal Finance | Finance

Nearly two-thirds of businesses have announced plans to cut staff following Rachel Reeves’ controversial tax rise in the autumn Budget.

Industry leaders are calling the move “damage control,” warning it will lead to mass layoffs, delayed wage increases and stalled growth.

The Confederation of British Industry (CBI) has warned that the Chancellor’s tax hikes are putting a major strain on businesses, with 62% of those surveyed saying they would cut hiring plans.

Nearly half of businesses also expect to have to lay off staff, and 46% expect pay increases for their workers to be delayed.

The CBI survey of 266 business leaders highlights the potentially far-reaching effects of tax rises, particularly on companies’ ability to invest and expand.

Raine Newton-Smith, chief executive of the CBI, stressed that profit was “not a dirty word” as it underpinned companies’ ability to invest, but the government’s actions had hampered that ability.

At today’s CBI conference in London, Ms Newton-Smith welcomed the new political and economic stability offered by the government after turbulent years under Conservative rule.

However, she condemned the way businesses have been blindsided by the increase in National Insurance contributions (NIC) and the reduction in the threshold at which they are paid.

She warned the measures would make it harder to achieve the economic growth that both Ms Reeves and Prime Minister Sir Keir Starmer are seeking.

She said: “What really determines growth are the decisions made in boardrooms across the country. CFOs (chief financial officers) ask, “Can we afford to invest? Can we afford to expand? new people? Well, post-budget, the answer we hear from many firms is still “not yet.”

Ms Newton-Smith also said the rise in network adapters, along with an increase in the national cost of living, which businesses say will force them to pass on some costs to consumers, employ fewer people or make smaller profits, has caught many businesses off guard.

She added that the potential cost of the labor rights bill only adds to the burden businesses face.

In the Budget, the Chancellor announced a £70 billion increase in government spending, financed by higher taxes and increased borrowing. The Labor Party also raised the minimum wage, which was praised by labor groups and trade unions but criticized by businesses for the strain it would place on their operations.

In a message to the government, Ms Newton-Smith stressed the need for ministers to work more closely with business in the future following the budget shock.

She said: “Tax rises like this should never again be about simply hurting business. This is a recipe for unintended consequences.”

The Chancellor is expected to tell the CBI later on Monday that there is “no alternative” to raising taxes as she defends a £25 billion increase in firms’ National Insurance contributions.

The Guardian reported that Ms Reeves is expected to add: “I’ve heard a lot of response to the government’s first budget, but I haven’t heard any alternatives.”

A Government spokesman responded: “Last month we introduced a one-off Budget to Parliament to wipe the slate clean and make a difference by investing in repairing the NHS and rebuilding Britain, while ensuring working people don’t face higher taxes on their payrolls. .

“This meant difficult choices to restore public finances and put them on a stronger footing. But the alternative was more austerity, more recession and more instability, which would make things worse for businesses and workers.”