Tuesday, August 12, 2025
Labour reaps consequences of NI rise
The paper says that the Chartered Institute of Personnel and Development (CIPD) has said that just 57 per cent of private sector employers plan to recruit staff in the next three months, down from 65 per cent last autumn, as they battle rising costs:
The influential monthly report by accountants KPMG and the Recruitment and Employment Federation (REC) also showed a "further steep decline" in permanent worker appointments last month, with recruiters blaming weak confidence in the economy and higher payroll costs.
Anna Leach, the chief economist at the Institute of Directors, warned the trend “could undermine the UK’s weak growth outlook further, hitting both living standards and tax revenues”.
The CIPD survey of 2000 employers found 84 per cent of UK businesses said their employment costs had risen since changes to NICs took effect in April 2025, while half of care and hospitality employers said those costs had risen to a large extent.
Ben Caswell, senior economist at leading think tank the National Institute of Economic and Social Research (NIESR), said the findings suggest firms are dealing with the NI hike by cutting staff rather than raising prices, but warned these were now being driven upwards by the chancellor’s minimum wage rise, which came in in April.
The news will come as a blow to Ms Reeves just days after the Bank of England warned the public of months of sharp price increases ahead, driven by higher food costs.
The central bank also blamed Ms Reeves’s NI raid and the rise in the minimum wage for helping to push up the cost of the supermarket shop, as it slashed interest rates to 4 per cent in a bid to boost the UK’s sluggish economy.
Ms Reeves has also been warned of a £50bn black hole in the government’s finances, which leading economists say means she may have to raise taxes, cut public spending, or tear up her fiscal rules in order to fill.
Labour are asking us to be patient, but that is not going to put food on the table. This is not a something they inherited, it is situation they created with their first budget.
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Whilst not wishing to defend Reeves at all, I merely point out that all tax changes have an initial effect, which then fades away as people get used to it. A good example was the application of VAT to takeaway foods, which led to a period of reduced demand but which faded away quite quickly.
The real problem was ruling out tax rises on the big earners like income tax and VAT and promising not to raise taxes on 'working people'. Of course Labour are penalising people who don't work and not taxing wealthy people nearly enough.
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The real problem was ruling out tax rises on the big earners like income tax and VAT and promising not to raise taxes on 'working people'. Of course Labour are penalising people who don't work and not taxing wealthy people nearly enough.
# posted by 
: 1:41 PM
: 1:41 PM<< Home
