Rachel Reeves's Budget choices having a 'damaging' impact on business investment, warns CBI boss
Yorkshire Post
2024-11-22
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Measures contained in Rachel Reeves’s first Budget are having a “damaging” impact on business investment, the head of the CBI has said.
Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), was in Yorkshire this week on a two-day trip to meet with businesses represented by her organisation.
Speaking to The Yorkshire Post in Sheffield in advance of a CBI business dinner at the Crucible theatre, said a recent survey of members done by the trade body found six in ten said the measures in the Budget made it less attractive to invest in the UK.
That follows the Office for Budget Responsibility forecasting that the measures in the Budget will result in lower business investment in the next few years.
Earlier this week, more than 70 retail businesses including Tesco, Asda and Sainsbury’s wrote to the Chancellor to warn her that the combined raft of packages announced in the budget including national insurance rises, packaging levies and increases to the national minimum wage could cost the industry more than £7 billion each year.
There has been particular concern about an increase in National Insurance for employers, which will see the threshold on which payments start on workers’ salaries cut from £9,100 per year to £5,000 from April 2025.
Ms Newton-Smith said: "It definitely feels the Budget is taking the slow road to growth. Now that businesses are really sitting down and going through some of the numbers and when they look at the increase in National Insurance contributions, that really does hit business’s bottom line.
"So when they are thinking about their plans for next year they are realising there is less room for investment if they had that sort of headroom to invest. It is harder for them to take a risk on hiring and creating opportunities.
"It definitely feels like a tough Budget for business when they are looking at their plans for the next few years. I do think there were things that were really welcome for the long-term in the Budget, like the extra space for capital spending on infrastructure and energy transition.
"But there is no doubt that the cumulative burden from the rise in National Insurance alongside the increases in National Living Wage is really challenging. We are a people-based economy and businesses I speak to want to be able to deliver a top-notch service to their customers. But they are running the numbers on what that means for their bottom line and it does feel really tough.”
She added: "We can point lots of areas where we have had a really constructive conversation with Government.
"We are seeing the biggest change in employment rights for a generation and government have really brought us into the room alongside unions to really say how do we bring in some of those changes in a way that helps make it easy for businesses to still provide jobs and growth and opportunities."
Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), was in Yorkshire this week on a two-day trip to meet with businesses represented by her organisation.
Speaking to The Yorkshire Post in Sheffield in advance of a CBI business dinner at the Crucible theatre, said a recent survey of members done by the trade body found six in ten said the measures in the Budget made it less attractive to invest in the UK.
That follows the Office for Budget Responsibility forecasting that the measures in the Budget will result in lower business investment in the next few years.
Earlier this week, more than 70 retail businesses including Tesco, Asda and Sainsbury’s wrote to the Chancellor to warn her that the combined raft of packages announced in the budget including national insurance rises, packaging levies and increases to the national minimum wage could cost the industry more than £7 billion each year.
There has been particular concern about an increase in National Insurance for employers, which will see the threshold on which payments start on workers’ salaries cut from £9,100 per year to £5,000 from April 2025.
Ms Newton-Smith said: "It definitely feels the Budget is taking the slow road to growth. Now that businesses are really sitting down and going through some of the numbers and when they look at the increase in National Insurance contributions, that really does hit business’s bottom line.
"So when they are thinking about their plans for next year they are realising there is less room for investment if they had that sort of headroom to invest. It is harder for them to take a risk on hiring and creating opportunities.
"It definitely feels like a tough Budget for business when they are looking at their plans for the next few years. I do think there were things that were really welcome for the long-term in the Budget, like the extra space for capital spending on infrastructure and energy transition.
"But there is no doubt that the cumulative burden from the rise in National Insurance alongside the increases in National Living Wage is really challenging. We are a people-based economy and businesses I speak to want to be able to deliver a top-notch service to their customers. But they are running the numbers on what that means for their bottom line and it does feel really tough.”
She added: "We can point lots of areas where we have had a really constructive conversation with Government.
"We are seeing the biggest change in employment rights for a generation and government have really brought us into the room alongside unions to really say how do we bring in some of those changes in a way that helps make it easy for businesses to still provide jobs and growth and opportunities."
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