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UK businesses are warning today that the tax rises in last month’s budget have put a ‘heavy burden’ on them, putting firms off hiring.
Business leaders are gathering at the Queen Elizabeth II Centre in central London for the Confederation of British Industry (CBI)‘s annual conference. They’ll hear from chancellor Rachel Reeves, and leader of the opposition Kemi Badenoch, after a breakfast with Bank of England (BoE) governor Andrew Bailey.
And the message from the CBI is that Reeves’s first budget will hurt profits, leading to lower investment and growth.
A survey conducted by the CBI after the budget found that nearly two-thirds of firms thought the budget will damage UK investment with half of firms looking to reduce headcount as a result.
CBI CEO Rain Newton-Smith will tell firms today that “tax rises like this must never again simply be done to business”.
She’s expected to say:“What really defines growth – is the decisions made in boardrooms up and down the country. It’s CFOs and CEOs asking: can we afford to invest? Can we afford to expand? Can we afford to take a chance on new people? Well after the budget, the answer we’re hearing from so many firms is still – not yet.
"The rise in national insurance and the stark lowering of the threshold, caught us all off guard.Set alongside the expansion and rise of the national living wage – which everyone wants to accommodate – and the potential cost of the Employment Rights Bill changes… they put a heavy burden on business.”
She will then warn: When you hit profits, you hit competitiveness, you hit investment. You hit growth."
Data last Friday showed that the UK private sector is stagnating this month, following the budget at the end of October.
Reeves is expected to tell business leaders that they have offered “no alternatives” to her plans, in a defiant defence of her tax-raising budget today.
Reeves will tell the CBI’s annual conference in Westminster that no one has offered a better solution to the challenging situation left behind by the previous, Conservative government.
“I have heard lots of responses to the government’s first budget but I have heard no alternatives,” she is expected to say.
“We have asked businesses and the wealthiest to contribute more. I know those choices will have an impact. But I stand by those choices as the right choices for our country: investment to fix the NHS and rebuild Britain, while ensuring working people don’t face higher taxes in their payslips.”
The CBI, which was hit by claims of sexual misconduct and a ‘toxic culture’ last year, is now hoping to have a greater influence over government policy again. Newton-Smith is expected to commend the government for “drawing the curtain on a near decade of instability” but urge them to shift from “consultation to co-design”.
The conference will be wrapped up by CBI president Rupert Soames. Back in February, he told us that the Guardian’s revelations about sexual misconduct at the lobbying group were “an appalling shock” that tipped it into a “near-death experience”.
Soames said the scandal had triggered an existential crisis; today’s conference will be a test of how well his rescue operation is going
Among the speakers at today’s conference is the US Embassy’s Deputy Chief of Mission, Matthew Palmer, who will discuss the US political situation.
The Bank of England is holding a conference today too, with economists and other ‘watchers’ of the UK central bank – we’ll be watching for any hints on how quickly it will keep cutting interest rates.
Financial markets will be digesting Donald Trump’s nomination of Scott Bessent, a billionaire hedge fund manager, to be the next US Treasury secretary. Bessent is seen as a Wall Street-friendly pick.
The agenda
• 9am GMT: Bank of England deputy governor Clare Lombardelli speaks at BoE Watchers’ conference
• 10.05am GMT: Opening keynote address at CBI conference from Rain Newton Smith
• 1.30pm GMT: Conservative leader Kemi Badenoch speaks at CBI’s annual conference
• 4.10pm GMT: CBI holds fireside chat with ‘senior cabinet minister’ (probably Reeves)
We’ll be tracking all the main events throughout the day ... |
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