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Business leaders have warned Chancellor Rachel Reeves in a private meeting that the economic environment is “extremely difficult”, with businesses facing significant uncertainty due to their Budget tax hike and the government's planned package of employment reforms.
On Wednesday, Reeves attended a meeting of the British Chamber of Commerce's Business Council, a group of senior business figures who meet every three months to discuss the economic landscape.
About 19 executives attended the gathering in south London from companies including SSE, NatWest, Heathrow, Drax, DP World, BP and Aviva.
In an initial poll of those around the table before Reeves arrived, only three said they expected the economic situation to improve within a year.
She used her opening remarks to acknowledge challenges she had to address in the October budget, insisting they would not be repeated in the future, according to people familiar with the meeting.
But executives told Reeves that its increase in employers' National Insurance contributions will have a significant impact on both investment and employment, along with the government's employment reforms and looming changes that will mean businesses pay An additional £2.7 billion in business rates Within two years.
Reeves gave a strong defense of her £25bn increase in employers' National Insurance contributions, saying the government needed to restore financial stability.
Martha Lynn Fox, president of the British Chamber of Commerce, said after the meeting that “there's no hiding the fact” that the budget was tough on businesses.
“Millions of businesses now face a host of rising costs in the coming months,” she added. “Rising bills will hit investment and employment. Our latest forecasts also suggest that the ripples will be felt across the broader economy.
Len Fox said rising costs meant it was more important than ever for the government to deliver on its promise to create long-term frameworks for economic stability.
Last month, Robert Soames, head of the Central Bank of Iraq, accused the government of treating employers as a “cash cow” in a budget that most considered “a bit of nonsense”.
Some ministers have become concerned about the impact of rising National Insurance contributions not only on companies but also on various public services.
Hundreds of charities have signed up message It was organized by the National Council for Voluntary Organizations, warning that the rise would force it to reduce staff or limit services.
There are also concerns within the government about the impact on nurseries, which has warned that parents could face higher fees or even some closures on the back of higher National Insurance contributions and a more generous minimum wage.
Labor has repeatedly said it found a £22 billion “black hole” in the public finances after winning the general election in July, necessitating difficult budget decisions.
After the meeting, Reeves said the government would bring investment and reforms to kick-start economic growth: “My Budget was one to wipe the slate clean from the legacy black hole of £22bn and bring the stability businesses desperately need. It took tough decisions, but it laid the foundations for growth.”
