Yesterday, Andrew Craig, founder of investment company Plain English Finance, told Reeves that instead of growth her Budget would deliver “unemployment, insolvencies and welfare costs”. We’ve seen yet more evidence of that today.
Her decision to pile another £25billion of National Insurance on employers is a complete disaster. Initially, Deutsche Bank said it would destroy 100,000 jobs.
Today Bloomberg Economics lifted that to 130,000, boosting unemployment by 0.4%. If businesses cover the cost by hiking prices instead, that’ll add another 0.9% to inflation.
The Confederation of British Industry (CBI) is also terrified. It said almost two-thirds of firms will cut new hires thanks to her Budget, while almost half will lay off existing staff.
Nice work, chancellor.
Today, the latest Bank of England financial stability report warned that half of all homeowners face higher mortgage payments over the next three years as the Budget helps push up inflation.
As a result, 4.4million households facing extra pressure on their finances, with more than 400,000 facing a £500 monthly jump in mortgage repayments.
Mark Eaton at lender April Mortgages warned: “Millions of homeowners are facing extreme payment shock as their fixed deals come to an end.”
Inflation was plunging before the Budget. To just 1.7% in September. It’s heading back towards 3% next year.
Before the Budget, Goldman Sachs predicted that UK interest rates would fall to just 2.75% by November 2025.
Today, the Office for Budget Responsibility reckons on 4%. That’s a huge hike. It would add £3,125 to the cost of servicing a £250,000 mortgage, or £260 a month. Again, the Budget is playing a part.
Parents with younger children will be driven out of the workforce next year as the Budget NI raid pushes up the cost of childcare, business analysts Blick Rothenberg says.
Families simply won’t be able to pay higher fees to cover staff NI payments, especially if their mortgage is going up too.
Blick Rothenberg also warned that social care costs for the elderly are set to “explode” from April, when Reeves’ NI hike comes into force.
A residential care home already costs £49,384 a year, according to LaingBuisson, rising to a staggering £65,884 for a nursing home.
Next year they’ll become even more unaffordable, eating up more family wealth.
Reeves NI raid will also hammer GP surgeries, dentists, hospices and charities. That’s something she never even considered when she swung her ball.
Pharmacies could die out altogether as Labour’s NI hike increases their costs by £200million a year, according to Community Pharmacy England.
The list just goes on and on.
One type of business is set to boom, as a direct consequence of wrecker Reeves.
Luke Johnson, chairman of bakery chain Gail’s, said insolvency specialists were “rubbing their hands” at the prospect of a bumper year of company collapses.
Reeves isn’t the only problem, of course.
Angela Rayner’s employment rights bill is expected to add £5billion to business costs. Energy Secretary Ed Miliband’s fanatical net zero charge will drive up energy bills and squeeze businesses further.
Today there was a big vote in Parliament on assisted dying. For a moment, I thought MPs were discussing what Rachel Reeves is doing to our economy.