Thursday, November 21, 2024

Reeves’s National Insurance raid ‘will hit living standards’

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As well as lower pay, Mr Meaning warned that the Government’s Budget – and Angela Rayner’s strengthening of workers’ rights – would also slow hiring.

He said: “The combination of the national living wage, the new deal for workers and employer NICs together work in the same direction for firms when they are making hiring decisions.”

More than 200 hospitality bosses wrote to the Chancellor over the weekend to warn they will be forced to close sites and lay off staff in the face of extra costs imposed by the Budget. The open letter, published by UK Hospitality, was signed by bosses at businesses including Wagamama owner The Restaurant Group, JD Wetherspoon and Young’s pubs.

Sainsbury’s last week also warned it would likely have to pass on the cost of the Budget to customers through higher prices.

Clive Black, director at Shore Capital, said: “Food inflation is going to be higher for longer. The whole population is going to pay for higher food prices as a result of the National Insurance move. When naivety and ideology mix it is very dangerous.”

Growth wipe-out

In the same note, Barclays warned that uncertainty from the Budget, combined with the threat of a US trade war launched by Trump, would wipe out any growth boost from Ms Reeves’s fiscal statement.

The bank’s analysts said: “Growth will be dominated by public sector consumption and investment, while the private sector remains muted in light of increased uncertainty, low consumer confidence, reduced real incomes and less favourable policy.”

The Chancellor hoped to give the UK economy a lift with £76bn of extra spending per year by the end of this parliament, but Barclays warned any uplift would be counteracted by Mr Trump’s trade policies.

The president-elect has threatened to impose tariffs of 60pc on Chinese imports and at least 10pc on those from the rest of the world.

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