National Insurance Nightmare: Businesses Cry Foul

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National Insurance Hike: Businesses Raise Concerns

Alex Veitch, policy director at the British Chambers of Commerce, acknowledges the government's need for difficult decisions in the Budget. However, he warns that raising employer National Insurance contributions would impede growth and reduce investment in staff.

Impact on Government Revenue

Isaac Delestre, an economist at the IFS, notes that the forecast does not consider the potential impact of increased National Insurance on other tax revenues, such as income tax.

Unintended Consequences

Alice Haine, a personal finance analyst at Evelyn Partners, cautions that a tax hike could lead to unintended consequences such as businesses reducing headcount or minimizing pension contributions to cut costs.

Delicate Situation for Government

Mr. Delestre describes the government's position on National Insurance as quite delicate. It remains unclear which aspect of National Insurance the government may increase for employers.

Impact on Economic Growth

Some have warned that a hike in National Insurance on employers would hobble economic growth, while the hospitality sector claims it would hammer their industry.

Potential Impact on Businesses

Businesses have expressed concerns that a rise in National Insurance would make hiring and job creation more challenging. Kate Nicholls, CEO of UK Hospitality, emphasizes that any increase would particularly impact sectors like hospitality, where staffing costs are significant.

Government's Financial Situation

The chancellor claims a £22bn hole in public finances, necessitating tax increases. The CBI, a leading lobby group, suggests that companies are delaying hiring and investment pending the government's tax and spending plans.

Labour's Position

Labour has pledged to be pro-business and boost economic growth. However, Sir Keir cautions that the Budget on October 30th will be tough. He adds that a National Insurance increase would make every job more expensive to maintain.