CBI boss warns Budget will mean fewer jobs are created

Half of UK companies will cut jobs and two-thirds will recruit fewer staff, according to the boss of the UK's top business lobby group.

- HOWARD MUSTOE

CBI chief Rain Newton-Smith said Labour chancellor Rachel Reeves's Budget has hit businesses, forcing them to consider expenditure on recruitment.

“Some of the decisions taken at the Budget have made it harder for businesses to invest, to take a risk on people and to create more jobs,” said Ms Newton Smith. “Our survey showed that half are now looking to reduce headcount. Almost two-thirds are looking to cut their plans to hire.”

She added that executives are asking, “Can we afford to invest? Can we afford to expand? Can we afford to take a chance on new people? Well after the Budget, the answer we’re hearing from so many firms is still ‘not yet’.”

In the October Budget, Ms Reeves announced a nearly £70bn uplift in public spending, partly funded by sharp increases in business taxes such as employer national insurance contributions. Labour also raised the minimum wage and pledged to make it harder to sack workers.

In response, retailers including Tesco, Sainsbury’s and Marks & Spencer have warned that they will face a £7bn jump in their costs because of the tax increases, which includes a rise in employers’ national insurance, and said job losses were “inevitable”.