The Chancellor has been accused of “derailing” Britain’s economy through her record tax raid, as fears continue to mount over rising inflation.
Business leaders and the Bank of England have warned that Labour’s Autumn Budget will further stoke inflation, which rose from 2.3 per cent to 2.6 per cent in November.
New figures have shown that wage growth accelerated for the first time in over a year in the three months to October, exceeding market expectations.
The data has now heightened concerns surrounding a potential reignition of the inflation crisis.
Since Labour came to power, the economy has contracted for two consecutive months
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Job vacancies have been declining for more than two-and-a-half years, marking the longest fall in hiring on record.
A recent survey revealed private sector employers are cutting jobs at the fastest rate since the financial crisis, excluding the Covid period.
Archie Norman, chairman of Marks & Spencer, warned that the increase in employers’ National Insurance contributions announced in the Budget would inevitably drive up prices and reduce economic activity.
“It is just unassailable arithmetic that if you put up National Insurance to that extent you will take money out of profits, out of funds that would have been available for investment, or for paying corporation tax, or for employing people,” he told The Telegraph.
“That is economics 101. The Chancellor made a big choice to take that money from business and put it into public services.”
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Jaguar Land Rover has announced that it has planned to halt “significant” investment plans in response to the increase in employer National Insurance contributions.
Murray Paul, JLR’s public affairs director, told a Business and Trade Committee hearing that the added costs are forcing the company to “unwind some investment” planned for the next five years.
While specific figures were not disclosed due to public forum constraints, Paul said that it was “a significant sum of money”.
In stark contrast to Britain, other major economies are moving towards monetary easing, including the US Federal Reserve, which is expected to lower borrowing costs on Wednesday evening.
Additionally, the European Central Bank has already reduced interest rates and signalled preparations for future cuts.
Traders have reduced their bets on the Bank of England cutting borrowing costs next year.
Andrew Griffith, shadow business secretary, accused Reeves of “throttling Britain’s recovery” and making the country an international outlier
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Company insolvencies surged by 13 per cent between October and November, reaching 1,966 cases.
The Insolvency Service noted that monthly averages in 2024 have remained similar to 2023, which saw the highest annual number since 1993.
Kate Nicholls, chief executive of UK Hospitality, said the Budget had destroyed optimism in her sector.
“This was the first year that we looked ahead and could see some signs of growth and recovery. We had green shoots. Those have just been dashed, and that hope and optimism have just been dashed by the £3.4biilion pound tax take,” she said.
Andrew Griffith, shadow business secretary, accused Reeves of “throttling Britain’s recovery” and making the country an international outlier.
“UK growth rates are delinking from other major economies,” Griffith said, adding that “Labour’s summer of trash-talking the economy and the choices made in the Budget itself… have clobbered confidence and jobs.”
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