Rachel Reeves is warned UK businesses cannot take any more tax rises - as fears grew that the economy is on the verge of a downturn
Rachel Reeves was last night warned that businesses cannot take any more tax rises as fears grew that the economy is on the verge of a downturn - 100 days on from the Budget.
Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), said firms were ‘still seriously flagging’ as they strain under the burdens imposed by the Chancellor.
Yet Ms Reeves is likely to come under pressure to put up taxes again as the Office for Budget Responsibility prepares new forecasts to be published in March.
Economists fear that with the outlook for growth revised down, the Chancellor’s ‘headroom’ to balance the books will be wiped out leaving her with a public finance black hole to fill.
Last month, Ms Reeves tried to reboot her flailing economic agenda with a speech outlining her commitment to prioritising growth.
But in a speech yesterday, Ms Newton-Smith said ‘warm words’ were not enough.
Policies that ‘support rather than burden enterprise’ are needed as well as changes to Labour’s workers’ rights package ‘to make sure it doesn’t make it harder for firms to take a risk on hiring people’, she said.
And Ms Newton-Smith said growth could also be boosted ‘by pledging not to add any more taxes to the burden already loaded on business’.
Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), said firms were ‘still seriously flagging’
Chancellor Rachel Reeves (pictured running in Westminster) is likely to come under pressure to put up taxes again
The Chancellor pledged at a CBI conference in November that she was ‘not coming back with... more taxes’ but she and other ministers have since rowed back on that pledge.
Today marks 100 days of the Budget on 30 October - which hammered employers with a £25 billion employer national insurance, part of an overall £40 billion package of tax hikes.
It has been blamed for killing investment and putting thousands of jobs at risk.
Today should see a degree of relief for firms with a Bank of England interest rate cut, which markets are betting will be the first of between three and four this year.
Businesses are pinning their hopes on that as they battle high borrowing costs and inflation.
Martin McTague, national chairman of the Federation of Small Businesses, said the rate cut ‘can’t come soon enough’ as firms struggle amid a ‘faltering economy’.
But the Bank is also expected to deliver a dose of gloom with lower growth forecasts.
Chancellor of the Exchequer Rachel Reeves hosts a British Infrastructure Taskforce roundtable meeting at the Treasury on Wednesday
Entrepreneur Luke Johnson yesterday delivered a damning verdict on the fall-out from the Budget.
Mr Johnson, the Gail’s Bakery chairman and former Pizza Express boss, said: ‘Confidence among entrepreneurs and investors is rock bottom. Owners are cutting costs and not hiring. Start-ups are on a slump. I fear we have already entered a recession.’
And Tory business spokesman Andrew Griffith said: ‘Confidence was the first casualty, businesses are now bleeding out and unemployment is rising. After Rachel’s first Budget, suffice to say no one is looking forward to the sequel.’
