Reeves warned taxes are ‘paralysing' business as a third slash jobs

Telegraph

5 days ago

Rachel Reeves has been warned that tax rises are 'paralysing' British businesses, with one in three companies cutting jobs to weather the £25bn National Insurance raid.
Shevaun Haviland, head of the British Chambers of Commerce (BCC), will on Thursday tell the Chancellor not to increase taxes on business in the autumn, warning that doing so would damage growth.
She will say at the BCC's annual conference: 'The Government needs to use the tax system to incentivise growth, not kill it. Increased taxation is paralysing business.'
A BCC survey of more than 570 businesses found that one in three had either already cut jobs or were preparing to in response to the increase in employers' National Insurance contributions, which took effect in April.
Ms Haviland will say: 'The size and scale of the rise in National Insurance contributions (NICs) took businesses by surprise.
'We were unprepared for the huge burden placed upon us, and it led many of us to rethink our growth plans. As a result, our business confidence measures have fallen to their lowest levels since 2022.
'For the Government to achieve its Growth Mission, people need to stay in work and businesses need to invest. As always, businesses soak it up and move forward, but they feel like they are wading through treacle.'
Separately research from think tank The Entrepreneurs Network found the vast majority of entrepreneurs were unhappy with the tax burden, and only 8pc believed the Labour Government understood their needs. One in six founders was looking to sell their business and one in 10 planned to leave the UK.
Lowering the burden
Eamonn Ives, the think tank's research director, said: 'The fact so few founders believe the Government understands what they require to grow is highly concerning.
'Whether it's by lowering the burden of taxation or simplifying our immigration system, the Government should be unstinting in ensuring that Britain is set up to actively support wealth creation here within our own shores.'
The Weil European Distress Index, published on Thursday, also warned that British businesses were experiencing some of the highest levels of corporate distress in Europe, in a warning sign that could foreshadow rising insolvencies.
High borrowing costs, weak investment and faltering investment were blamed for UK companies' misery, with only German corporates struggling more. Distress is defined by falling profits, valuations and rising insolvency risk.
Across Europe, the level of distress in the retail sector is now at the highest level since the financial crisis. Andrew Wilkinson, of Weil's London restructuring practice, said: 'Retail's position is a warning sign: rising costs and falling confidence are pushing firms to their limits.'