{"id":101856,"date":"2025-01-17T12:26:19","date_gmt":"2025-01-17T12:26:19","guid":{"rendered":"https:\/\/en.econostrum.info\/uk\/?p=101856"},"modified":"2025-01-17T12:26:22","modified_gmt":"2025-01-17T12:26:22","slug":"tax-hikes-squeeze-uk-businesses-layoffs","status":"publish","type":"post","link":"https:\/\/en.econostrum.info\/uk\/tax-hikes-squeeze-uk-businesses-layoffs\/","title":{"rendered":"Tax Hikes Squeeze UK Businesses: Layoffs and Hiring Freezes Loom"},"content":{"rendered":"\n<p>Due to recent legislative changes that have resulted in a sharp increase in operating costs, businesses around the United Kingdom are facing considerable tax-related hurdles. Widespread worries about layoffs, hiring freezes, and economic stagnation are being fueled by a significant increase in the minimum wage and a steep rise in National Insurance tax contributions.<\/p>\n\n\n\n<p>With the UK economy exhibiting little growth in recent months and company confidence falling at the sharpest rate in two years, these difficulties are made worse by broader economic pressures. Employers from all industries caution that the nation&#8217;s labor market and general economic health will be greatly impacted by the consequences of these changes.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Tax Increases Hit Businesses Hard<\/h2>\n\n\n\n<p>The recent increase in National Insurance contributions from <strong>13.8% to 15%<\/strong> is the biggest worry for businesses. Many firms have found it difficult to cover expenses as a result of this tax load and the <strong>6.7%<\/strong> increase in the minimum wage to <strong>\u00a312.21 per hour<\/strong>.<\/p>\n\n\n\n<p><strong>Nick Coburn<\/strong>, managing director of Ulster Carpets Group, which turns over <strong>\u00a3100m<\/strong> annually, described the situation as a \u201cseismic shock\u201d that mirrors the challenges faced during the 2008 financial crisis. \u201cWe had planned to increase our staff by around 30 to 35 people, but we\u2019ve completely culled that idea simply because of the hit from National Insurance\u201d Coburn stated, noting that the changes will cost his business over \u00a32m.<\/p>\n\n\n\n<p>The strain on smaller enterprises is even more pronounced. Mike Burks, managing director of <strong>The Gardens Group<\/strong>, which employs <strong>160 people<\/strong>, said the <a href=\"https:\/\/en.econostrum.info\/uk\/homebuyers-brace-tax-bills-increase-6250\/\" data-type=\"post\" data-id=\"101305\">tax increases<\/a> would erase two-thirds of his company\u2019s profits. &#8220;It\u2019s such a dramatic increase in costs, which would serve to wipe out two-thirds of our profit. It\u2019s an impact on a scale that just isn\u2019t easy to comprehend. And I think it\u2019s<strong> bound to dampen growth<\/strong> in the whole economy,&#8221; he explained. The company has already decided to forgo hiring seasonal workers as a direct consequence of these changes.<\/p>\n\n\n\n<p>Large-scale employers have echoed these concerns. Major UK retailers have issued warnings of \u201cinevitable\u201d job losses, citing their inability to manage the surge in wage bills alongside rising taxes. According to a survey by the<strong> <\/strong><a href=\"https:\/\/www.britishchambers.org.uk\/\" target=\"_blank\" rel=\"noopener\"><strong>British Chambers of Commerce<\/strong> <\/a>(BCC), three-quarters of companies are under pressure to raise prices to offset higher costs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Economic Slowdown and Hiring Freezes<\/h2>\n\n\n\n<p>The broader economic environment is exacerbating the crisis for employers. The UK economy, which led G7 growth at the start of<strong> 2024<\/strong>, has since stagnated, with hiring activity declining sharply. <strong>Michael Stull<\/strong> of Manpower noted a <strong>30%<\/strong> year-on-year drop in job postings, describing the labour market\u2019s behaviour as characteristic of a recession.<\/p>\n\n\n\n<p>Recruitment firms are also feeling the pinch. <strong>Robert Walters<\/strong>, a leading firm in the sector, reported a <strong>45% drop<\/strong> in fee income from hiring outside London in the <strong>last quarter of 2024<\/strong>. Its CEO attributed the decline directly to increased employer costs resulting from the Budget.<\/p>\n\n\n\n<p>Business confidence has reached a two-year low, according to the Institute of <strong>Chartered Accountants in England and Wales<\/strong> (ICAEW). Meanwhile, economist Steven Bell warned that the rising tax burden, combined with global economic pressures, could lead to a \u201cmild <a href=\"https:\/\/en.econostrum.info\/uk\/bank-of-england-expected-cut-interest-rates\/\" data-type=\"post\" data-id=\"101821\">recession<\/a>\u201d or worse. \u201c I think [companies will] hire fewer [people]. They\u2019ll fire more, and some labour-intensive businesses will simply go out of business,\u201d Bell said.<\/p>\n\n\n\n<p>Employers have few options to mitigate the impact. Coburn noted that passing on costs to customers by raising prices was becoming increasingly unviable due to stiff competition from abroad, particularly China. He fears layoffs are now inevitable, with up to 30 jobs at risk at Ulster Carpets Group.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A surge in tax burdens and rising wages has left UK businesses grappling with unprecedented challenges. Employers warn of halted growth, hiring freezes, and potential layoffs as the economy teeters on stagnation. Confidence is plummeting, and costs are soaring, reshaping Britain\u2019s business landscape.<\/p>\n","protected":false},"author":10,"featured_media":101858,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[],"class_list":["post-101856","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-employment","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33","no-featured-image-padding"],"_links":{"self":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts\/101856","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/comments?post=101856"}],"version-history":[{"count":4,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts\/101856\/revisions"}],"predecessor-version":[{"id":101881,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts\/101856\/revisions\/101881"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/media\/101858"}],"wp:attachment":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/media?parent=101856"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/categories?post=101856"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/tags?post=101856"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}