What's happened
Rain Newton-Smith, head of the CBI, warns that recent tax increases from Chancellor Rachel Reeves' budget are hindering business investment and could lead to job cuts. Many firms are reconsidering hiring plans due to increased costs from national insurance contributions and minimum wage hikes.
Why it matters
What the papers say
According to Rain Newton-Smith, chief executive of the CBI, the recent budget has made it harder for businesses to invest and hire. She stated, "When you hit profits, you hit competitiveness, you hit investment, you hit growth" (The Guardian). This sentiment is echoed by various retailers, including Tesco and Sainsbury's, who have warned of significant cost increases due to the tax changes, potentially leading to job losses (BBC News). In contrast, Chancellor Rachel Reeves argues that these tax increases are essential for funding public services and insists that businesses have not proposed viable alternatives to her budget (The Independent).
How we got here
The UK government, under Chancellor Rachel Reeves, recently announced a budget that includes a £70 billion increase in public spending, funded by significant tax hikes, particularly in employer national insurance contributions. This has raised concerns among business leaders about its impact on investment and employment.
Common question
-
What are the Economic Challenges Facing UK Businesses in 2024?
As the UK grapples with significant economic changes, businesses are facing a myriad of challenges. From tax increases to rising operational costs, understanding these issues is crucial for navigating the current landscape. Below, we explore key questions surrounding the economic climate and its impact on UK businesses.
More on these topics
-
Rachel Jane Reeves is a British Labour Party politician serving as Shadow Chancellor of the Duchy of Lancaster and Shadow Minister for the Cabinet Office since 2020. She has been the Member of Parliament for Leeds West since 2010.
-
The Confederation of British Industry is a UK business organisation, which in total claims to speak for 190,000 businesses, this is made up of around 1,500 direct members and 188,500 non-members.
-
Sir Keir Rodney Starmer KCB QC MP is a British politician and former lawyer who has served as Leader of the Labour Party and Leader of the Opposition since 2020. He has been Member of Parliament for Holborn and St Pancras since 2015.
-
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the northwestern coast of the European mainland.
-
Labor-Gesher was a joint list of the Israeli Israeli Labor Party and Gesher parties for elections for the twenty-second Knesset. The list advocated social democracy and progressive taxation. The list's platform focused primarily on socio-economic issues.
-
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based.
-
Tesco plc, trading as Tesco, is a British multinational groceries and general merchandise retailer with headquarters in Welwyn Garden City, Hertfordshire, England, United Kingdom.