Business | Budget
BUSINESSES BEAR BRUNT OF THE BUDGET
CHANCELLOR RACHEL REEVES TOOK CENTRE STAGE ON NOVEMBER 26 WHEN SHE STOOD IN FRONT OF THE HOUSE OF COMMONS TO GIVE HER ECONOMIC INSTRUCTIONS FOR THE NEXT YEAR. WITH SO MUCH OF IT IMPACTING BUSINESSES, ASSISTANT EDITOR BENJAMIN
AUSTIN DELVED DEEPER INTO THE REPORT.
The dust has settled after what ended up being a farce of a Budget announcement. Chancellor Rachel Reeves received plaudits for the way she conducted herself despite a monumental error occurring on the side of the Office for Budget Responsibility (OBR), which leaked the contents of her decisions almost an hour before she had even addressed Parliament. The mistake had an impact on the markets, but her composure did bring back stability, however it will not take away from the impact the changes will make to the economy.
Despite receiving praise Rachel has been accused of pushing policies that seem to solely pander to Labour backbenchers.
The scrapping of the two-child cap despite previously suggesting otherwise, and the proposal of a ‘mansion tax’ for properties above £2m are claimed as ways for the chancellor to play politics with her party. Raising the National Living Wage for all ages while freezing the income tax threshold until 2031 could also be perceived as a political work-around to raise taxes without explicitly saying such.
But ultimately the announcement has seemingly met little backlash with the public and though it is not suggesting quick and major boost, the OBR has upgraded the country’s growth projections from 1% to 1.5%; a 50% increase. Yet businesses still seem to be in the firing line following yet more financial burdens being placed on their books.
22 | Dec 2025/Jan 2026 NATIONAL LIVING WAGE
The raising of the National Living Wage in 2024 put a massive burden on all businesses, especially small and medium enterprises (SMEs) as it was a greater expenditure denting profit margins. Now Ms Reeves once again looked to deepen her pockets using with the same method as before raising the minimum wage for all ages for a second time. From April, workers under 21 years old will have
their paychecks boosted to £10/hr while those over will now earn £12.71/hr. Especially for younger workers that is a huge boost
in wages which will have a serious impact on those who employ them. Rain Newton-Smith, chief executive of the CBI, said:
“Adding national insurance to salary sacrifice pension contributions curtails savings and pushes up the cost of employment.
“Coming on top of the rise to the National Living
Wage, increased employment costs make it even more expensive for employers to offer jobs to young people and jobseekers.” Pair this increase with the lowering of the National Insurance Contribution (NIC) threshold in the 2024 Budget, this not only means more money leaving in wages but even more being siphoned into these payments.
And it doesn’t even necessarily mean greater income
for workers as the chancellor also announced she will freeze income tax thresholds until 2031.
The Budget is to have an impact on SMEs and youth employment
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