LONDON – Firms across Britain are “in damage control” with nearly half planning to cut jobs after the Labour government’s tax-rising budget, according to the boss of the country’s most influential business lobby group.
Finance Minister Rachel Reeves increased taxes by more than £40 billion (S$67.6 billion) last month, most of which will come from changes to national insurance, a payroll levy.
“Tax rises like this must never again be simply done to business,” Rain Newton-Smith, chief executive officer of the Confederation of British Industry (CBI), is expected to say at the lobby group’s annual conference in London on Nov 25. A revenue-raising budget had been widely anticipated but many firms were surprised by the scale of the hikes.
Many businesses surveyed by the CBI after Ms Reeves’ budget said they were not willing to invest, expand or take a chance on new people.
“Even where the risk isn’t critical, firms that have been through really tough years are now in damage control again,” Ms Newton-Smith will add, according to pre-released extracts of her speech.
Around six in 10 businesses told the CBI that the budget would not make the UK more attractive for investment, a key aim of the Labour government as it tries to boost growth. The survey was carried out in the days immediately after the budget and received 185 responses, the CBI said.
It asked more questions in the middle of November, receiving 266 responses. According to that survey, close to half of businesses – 48 per cent – were planning to trim their workforce, while 62 per cent said they would hire fewer people.
“When you hit profits, you hit competitiveness, you hit investment,” Ms Newton-Smith will say.
The CBI wants the government to make occupational health tax-free, in a move it says will stop 34,000 people dropping out of the workforce. It also wants a reform of planning laws to increase development, a simplified tax system and better tech adoption. BLOOMBERG