Businesses brace for layoffs as Rachel Reeves's tax hikes take effect

In the United Kingdom, recent tax hikes introduced by Chancellor Rachel Reeves have prompted serious concerns among employers, particularly regarding employment. Following a survey from the Chartered Institute of Personnel and Development (CIPD), the level of businesses intending to make staff redundant is at a decade high, excluding periods affected by the Covid pandemic. The survey indicates that around a quarter of businesses plan to reduce their workforce or slow recruitment efforts, while a significant portion anticipates increasing their prices in response to rising employment costs, attributed mainly to heightened national insurance obligations. As small businesses report their lowest confidence levels since the pandemic, the Federation of Small Businesses (FSB) notes that many companies in vulnerable sectors, such as accommodation and food services, are particularly pessimistic about future growth. With nine out of ten employers expecting to face higher employment costs, the trepidation surrounding the situation is palpable. Critics argue that Reeves's tax measures are adversely impacting the economy further, with several political figures stating these changes could lead to increased hardships for individuals in the workforce. The sentiment among business leaders is clear; there is an urgent need for government measures that promote economic growth. The call from industry representatives emphasizes the danger of current policies hampering business investments and leading to reduced hiring and wage stagnant conditions. The narrative suggests that the government must prioritize measures aimed at fostering stability and facilitating growth among both small and large enterprises. Government responses, however, maintain that the tax rises were essential for achieving financial stability for public services and protecting employees from larger tax increases. A Treasury spokesperson has claimed that over half of employers will see cuts or no changes to their national insurance bills under the new budget. Nonetheless, as the outlook for 2025 begins, the business community's anxiety underscores the challenges ahead for the UK economy.