The chief of an organisation representing UK businesses has warned that it will take a while for the “real impact” of Rachel Reeves’ business tax hike to be seen. Shevaun Haviland, Director General of the British Chambers of Commerce, told BBC Radio 4’s Today programme this morning: “Increasing National Insurance tax on business is going to be really hard for business.
“They’re going to put up prices, they’re going to reduce investment, they’re going to stop recruiting. That’s what they tell us. So what we want to see from the Government is that they focus on how they can drive growth. Let’s decrease taxes in the future, let’s focus on infrastructure builds, and let’s help our businesses get trading around the world.” When asked if businesses are stopping people or having to let people go already; she added that the BCC’s members are “definitely looking at plans that they had in place for this year.”
“It’s going to be a while until we see the real impact,” Ms Haviland said. “But, of course, businesses are reviewing their plans.”
She added that the job market is “tight” and “hard”, and it is difficult to find people to recruit with the necessary skills needed for roles.
Therefore, it is important to keep people in work who may be ill by making “adjustments” in the workplace or using the tax system to ensure businesses offer more health benefits to their employees.
It comes after the UK’s economy unexpectedly shrunk in January, as GDP fell by 0.1%.
Kevin Smith, Chief Technology Officer at financial planning software firm Lucanet, warned businesses are “flying blind” due to policies “changing all the time”.
He said: “The real challenge isn’t just about adapting to things like the National Insurance hike; it’s the broader economic instability and uncertainty that has become the new normal. Fiscal policies and regulations are evolving rapidly – as well as being scrapped or rolled back – making it increasingly difficult for finance teams to plan with confidence.
Mr Smith added: “Compounded by the use of outdated technology, siloed data and manual processes, CFOs and financial directors are often flying blind when it comes to budgeting and forecasting and then scrambling to adapt to last-minute changes.
“While the Chancellor [isn’t expected to introduce] any direct tax rises, this isn’t to say there won’t be big policy announcements further down the line.
“Businesses need to be on the front foot when it comes to scenario planning and they must focus on building agility into their financial strategies now. That means investing in the right tools and technology to enable rapid response to shifting economic conditions.”
