The Confederation of British Industry (CBI) has raised concerns over tax increases introduced in the recent Budget, saying they are discouraging businesses from hiring and investing in the UK. Chancellor Rachel Reeves unveiled measures that include a £70 billion increase in public spending, partly funded through higher employer taxes, such as National Insurance. While the government argued these steps are essential for stabilizing the economy, CBI leader Rain Newton-Smith emphasized at the annual conference that the changes have exacerbated challenges for businesses.

Business Leaders Sound Alarm Over Investment Prospects

Corporate leaders like Salman Amin, CEO of Pladis (parent company of McVitie’s), expressed doubts about the viability of investing in the UK given the increased tax burden. A CBI survey of 185 firms found that nearly two-thirds believe the Budget will negatively impact UK investment.

For example, Stuart Paver, head of Pavers Shoes, revealed his company faces an additional £4.2 million in costs, forcing a slowdown in store expansion plans. Major retailers like Tesco, Amazon, and Sainsbury’s have also warned that rising business expenses may translate into higher prices for customers.

Mixed Reactions: Businesses Struggle, Workers Benefit

While some workers’ groups welcomed higher minimum wages and enhanced worker protections, business leaders expressed frustration at the added financial strain. Newton-Smith called on the government to avoid imposing sudden tax hikes on businesses in the future and suggested reforms in critical areas such as business rates, the apprenticeship levy, and planning laws to foster growth.

Political Divide on Tax Policy and Economic Strategy

Former business secretary and Conservative Leader Kemi Badenoch voiced concerns about the escalating tax burden, particularly on small businesses. She warned that these costs will ultimately affect workers and consumers and advocated for a clear strategy to help UK businesses remain competitive in the face of global challenges such as technological shifts and an aging population.

In response, Labour defended its first Budget in 14 years, describing the increased corporate taxes as a fair approach to funding essential public services, including the NHS. The government reiterated its commitment to working with businesses to drive growth and improve living standards across the nation.

Key Takeaways for UK Businesses and Investors

The ongoing debate underscores the tension between ensuring fiscal stability and creating a supportive environment for businesses. As employers navigate higher taxes and operational costs, concerns about the UK’s competitiveness as an investment hub continue to grow.

Source: bbc.co.uk