Chancellor Rachel Reeves Responds to Business Leaders’ Complaints About National Insurance Hike at CBI Conference, Insists It’s a Necessary Measure

Chancellor Rachel Reeves remains unshaken by the backlash from business leaders over her recently announced tax hikes, especially the £25 billion increase in employer National Insurance.

Speaking at the CBI conference, Reeves acknowledged the concerns raised but pointed out that few have offered viable alternatives to her fiscal approach.

“What I haven’t heard are many alternatives,” she remarked, defending her decisions while asserting that the tough measures were necessary for the country’s economic stability.

Defending Tough Choices and Future Plans

Reeves expressed confidence in her handling of the country’s financial situation, claiming that the tax increases were essential to securing long-term stability.

She reassured the audience that this would likely be the last significant tax hike of the current Parliament.

“We’ve drawn a line under the inheritance I faced,” she said, highlighting the firm footing of public finances and proper funding for public services.

Reeves made it clear that businesses should not expect further borrowing or additional tax increases during her tenure.

Business Reactions to the Budget

Despite Reeves’ confident defense, the business community has raised alarms.

The National Insurance hike has been particularly concerning for many sectors, including retail and hospitality, where half of the businesses surveyed are now considering job cuts, and two-thirds are reducing hiring plans.

CBI chief executive Rain Newton-Smith stressed that these industries are facing a “crisis containment” situation, with firms now focusing on “damage control” rather than investment.

Newton-Smith also reminded the Chancellor that profit is essential for growth.

“When you hit profits, you hit competitiveness, you hit investment, you hit growth,” she warned.

Meanwhile, Rupert Soames, chair of the CBI, accused the government of treating businesses as a “cash cow” that has been “milked.”

McVitie’s CEO Joins Criticism

The CEO of McVitie’s parent company, Pladis, Salman Amin, added to the growing concerns, noting that it’s becoming increasingly difficult to see the justification for investing in the UK.

He wasn’t alone in voicing skepticism; many business leaders are concerned about the impact of the £40 billion tax rise on their ability to grow and hire.

Recession Fears and Growth Forecasts

The Office for Budget Responsibility (OBR) has downgraded the UK’s growth forecasts following the Budget announcement, and official data reveals that economic growth in the first quarter of Labour’s term dropped to a mere 0.1%, down from 0.5% the previous quarter.

Labour leader Sir Keir Starmer acknowledged that these figures were disappointing and promised to redouble efforts to boost investment.

Businesses Struggling with New Tax Burden

Despite Reeves’ optimism, many businesses are struggling with the fallout from the Budget.

Newton-Smith emphasized that the tax hikes have placed a heavy burden on companies trying to invest and create jobs.

Sectors such as retail and hospitality, already reeling from the economic toll of recent years, are now prioritizing survival over growth.

Many businesses are scaling back on training, delaying decarbonization projects, and passing increased costs on to customers.

Political Reactions and Criticism from the Opposition

Opposition figures have not been silent in their critique of the Budget.

Tory shadow Chancellor Mel Stride accused Reeves of failing to understand the detrimental effects of Labour’s National Insurance hikes on businesses.

He argued that the tax increases would hurt job creation, reduce wages, and discourage investment.

John O’Connell, CEO of the TaxPayers’ Alliance, joined the criticism, suggesting that the Chancellor’s defense of her fiscal policies lacked credibility with business owners.

He called on Reeves to reverse the National Insurance hike if she was serious about her growth agenda.

What’s Next for the UK Economy?

With business leaders raising concerns about the future, the pressure on Reeves to address these challenges is mounting.

As the government faces mounting criticism from both the business community and opposition parties, it remains to be seen how Labour will navigate these economic hurdles.

Whether the Chancellor’s confidence in her fiscal approach will translate into sustained growth and stability remains uncertain, as the UK grapples with the repercussions of her budget decisions.

This article was published on TDPel Media. Thanks for reading!

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