Sir Keir Starmer insisted he still has confidence in Chancellor Rachel Reeves despite a torrent of criticism over her tax-hiking Budget.
Chancellor Rachel Reeves hiked employer national insurance contributions by £25.7 billion in a bid to boost Treasury coffers.
But the move has led to dire warnings of job losses, higher inflation and businesses postponing growth plans.
More than 70 businesses, including Tesco, Asda and Sainsbury’s, have told Rachel Reeves in an open letter that the changes announced in last month’s Budget mean price hikes are a “certainty”.
The governor of the Bank of England Andrew Bailey said retailers were “right” to warn of potential job cuts following the Budget changes.
“I think there is a risk here that the reduction in employment could be more. Yes, I think that’s a risk,” he said.
Asked whether he still had confidence in the Government’s financial plans and by extension the Chancellor, Sir Keir told a press conference at the G20 summit in Brazil: “Absolutely.
“We have to stabilise the economy, we have to deal with the £22 billion black hole, and we need to invest in the future of our country.
“The reason we got into such a mess over the last 14 years is because the last government refused to take a single difficult decision.”
The PM accused Tory leader Kemi Badenoch of still being “in the same camp,” wanting “all the benefits” of investment in public services “but she doesn’t want to raise any of the money to pay for it”.
“That’s exactly why we got into this problem in the first place – unfunded commitments. We’ve ended that, we’ve turned the page,” he said.
Ms Reeves revealed a £25.7 billion change to employers’ national insurance contributions (NICs) in the budget, which would increase the rate of the tax and the threshold at which firms must pay.
Businesses have said the raft of Budget policy measures, which also included packaging levies and increases to the national minimum wage, will cost the industry £7.06 billion a year.
The letter, arranged by the British Retail Consortium, was also signed by household names including Amazon, Aldi, Boots, B&Q, Currys, Greggs, JD Sports, Marks & Spencer, Next and Primark.
The letter reads: “We appreciate Government’s focus on improving the fiscal situation and investing in public services; we also recognise the role businesses have in supporting this.
“But the sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”
The group said they would “welcome” the chance to meet Ms Reeves and recommended potential changes including phasing the introduction of the national insurance lower earnings threshold, delaying timelines for packing levy implementations and revisiting business rates proposals announced in the Budget.
“By adjusting the timings of some of these changes, the Government would give businesses time to adjust and greatly mitigate their harmful effects on high streets and consumers,” it read.
It comes after warnings by a number of bosses across the sector in recent weeks.
Sainsbury’s boss Simon Roberts said, earlier this month, that the tax hikes would mean higher inflation for shoppers, while Asda warned that it would face an extra £100 million in costs thanks to the Budget.
