The Confederation of British Industry (CBI) has warned that recent tax rises introduced in the UK Budget are making it harder for businesses to take risks and hire staff, potentially stalling investment and growth. In a speech at the CBI’s annual conference on Monday, Rain Newton-Smith, the group’s CEO, criticized the government’s approach, highlighting that the increase in National Insurance contributions (NICs) and inheritance tax are putting additional pressure on businesses already facing a tough trading environment.
Newton-Smith’s comments come after Chancellor Rachel Reeves’ first Budget, which announced an almost £70 billion increase in public spending, partially funded by tax hikes on businesses. While workers’ rights reforms and minimum wage increases have been welcomed by unions, many business leaders have expressed concerns about the burden of multiple simultaneous changes, which they say could stifle economic growth.
“Tax rises like this must never again simply be done to business,” Newton-Smith said. She pointed to a recent survey by the CBI, which found that nearly two-thirds of the 185 companies polled believe the Budget will harm investment in the UK. She emphasized that profits are not just “extra money for companies” but are essential for investment, competitiveness, and growth. “When you hit profits, you hit investment. You hit growth,” she added.
Retailers, including Tesco, Amazon, and Next, have written to the chancellor, warning that the tax changes will lead to higher costs, potentially forcing them to raise prices for consumers. Critics, however, argue that asking large companies to contribute more in taxes is a fair way to support public services like the NHS.
Newton-Smith acknowledged the need for tax rises but expressed concern over the lowering of the National Insurance threshold, which she said was “really serious” for businesses. She urged the government to consider reforms to stimulate economic growth, such as allowing businesses more flexibility in how they use apprenticeship levy funds, updating business rates for commercial properties, and simplifying the planning system.
The chancellor is expected to respond to criticism at the CBI conference, defending her approach and stressing the need to “wipe the slate clean” after the General Election. A government spokesperson explained that the tax rises were necessary to address the public finances’ challenges and put the UK on a stronger economic footing, while also focusing on growth and working with businesses to secure the country’s future prosperity.