Any budget will result in some disagreements and controversies over its likely impact. Chancellor of the Exchequer Rachel Reeves has been defending her budget decisions to businesses, many of which argue that it will damage their ability to invest and be competitive.
Budget Provisions Impacting Businesses
One of Reeves’ stated goals with this budget was to reduce the burden on public finances, and it appears that her aim is for businesses to pay for many of her spending commitments. Measures include an increase in the National Insurance rate for employers, a lowering of the threshold to pay National Insurance, higher business rates, an increase in the minimum wage and a general expansion of workers’ rights.
What Businesses Say
Businesses have been critical of these budget provisions, saying that they put too great a burden on business, especially with so many changes being implemented at the same time. The head of the CBI, the UK’s largest group for businesses, claims that around half of its members fear they will have to cut staff, while 66% will reduce recruitment. One notable business that has expressed concern is McVitie’s, with its CEO seriously reconsidering whether it is worth making investments in the UK.
These sorts of reactions suggest that business growth consulting services such as Tandem Consultancy may become more sought after as companies attempt to navigate new costs whilst still pursuing growth.
How Reeves Has Responded
Reeves gave a speech to the CBI where she acknowledged the difficulties faced by businesses, but she said that she was forced to make difficult decisions in the budget because of the economic situation currently faced by the country. She wants to provide stability and support public services while avoiding more borrowing or significant tax rises. There was no sign that she was going to rethink the policies announced in her budget, and she expressed some disapproval of those criticising her plans while failing to present viable alternatives.
The budget presents many challenges to businesses, and there is still uncertainty about future tax rises. It remains to be seen just how it will work in practice.