Rachel Reeves risking a "bonfire of jobs" with massive tax rises, warn businesses and MPs

Businesses and MPs warn of job losses and higher prices

Rachel Reeves is facing criticism as she plans one of the biggest tax hikes in history, aiming to raise £40 billion in levy increases and spending cuts. The proposed budget includes higher income tax, employer National Insurance Contributions (NICs), inheritance tax, and fuel duty, causing concern among business leaders, economists, and Tory MPs.

Concerns raised by business leaders

Business chiefs, economists, and MPs warn that the tax hikes could lead to job losses, reduced wages, and increased prices. The Federation of Small Businesses expressed worries that raising taxes on small firms could result in cuts to pay, hours, and jobs, while UK Hospitality's boss highlighted the impact of increasing employer NICs on struggling businesses.

Shadow Treasury Minister's warning

Laura Trott, the shadow Treasury Minister, emphasized the potential negative impact of the tax hikes, stating that it could lead to job losses across the country. Former Chancellor Kwasi Kwarteng also voiced concerns, warning that raising taxes and limiting growth could create a detrimental cycle.

Pressure on businesses

Businesses are already facing challenges, with additional costs from increased trade union power and employment law regulations. A survey by UK Hospitality revealed that a quarter of pubs, bars, and restaurants have reduced their opening hours, indicating the struggle faced by the industry.

Reactions from experts

Experts from the Institute for Fiscal Studies and the Institute of Economic Affairs think-tank raised concerns about the economic impact of tax rises. They suggested that balancing the budget through spending cuts and long-term state reform might be a more effective approach.

Government facing backlash

The government is under pressure as Cabinet ministers express discontent over spending cuts and budget constraints. There are fears of resignations over the harsh settlements imposed by the Treasury, with concerns raised about the impact on various departments and services.

Rachel Reeves' stance

Rachel Reeves defended the tax hikes as necessary to address the financial challenges left by the previous government. She plans to increase borrowing for infrastructure projects to stimulate growth, while acknowledging the tough decisions ahead.

Labour's challenges

Labour's popularity has waned since the election, prompting a reset within the party. The appointment of Morgan McSweeney as the chief of staff aims to strengthen the political operation and improve the party's standing.