Carl Emmerson, the deputy director at the IFS, said: “I don’t think there is a tax rise you can do, which wouldn’t lead to someone in paid work losing out.”
He added that forcing employers to increase their national insurance contributions will make it more expensive to employ people and “will be felt in wages eventually”.
“The theory and the evidence is that it will lead to lower wages,” he said. “That will dampen growth in the short term. And in the longer run people might be less inclined to work longer hours – that is how you get a negative effect in a sustained way on growth.”
Craig Beaumont, the executive director of the Federation of Small Businesses, said the rise to employers’ national insurance will make “almost every job in the private sector more expensive” and is urging Ms Reeves to announce an increase to employer allowance to cushion the blow.
The number of businesses filing notices for voluntary liquidation – meaning directors have chosen to wind up a company rather than being ordered to do so by a court because of bankruptcy – rose to a yearly high of more than 1,600 this month, according to a Bloomberg analysis of notices filed in The Gazette.
Edwin Kirker, a London-based liquidator, said he had seen a rise in the number of business owners looking to wind up ahead of the Budget.
“There’s a raft of them that have been coming through in the last couple of months ever since everyone began assuming the Government would increase inheritance tax and capital gains tax,” he said.
A HM Treasury spokesman said: “As the Chancellor made clear at the International Investment Summit in London: when we said we would end instability, make growth our national mission and enter a true partnership with business, this government meant it. We do not comment on speculation around tax changes outside of fiscal events.”