Business | Budget


Professor Joe Nellis, economic advisor at MHA said: “The continued freeze on income tax and National Insurance thresholds will drag many more earners into paying higher rates of tax.” It also springs a newer issue in youth employment with it potentially having a negative impact on the number of young people gaining success in the job market.


YOUTH EMPLOYMENT


Professor Nellis continued: “The above-inflation increase in the minimum wage is good for low-paid workers who happen to be in work, but this may disincentivise hiring at a time of high youth unemployment and economic activity.”


Simply put, if a company is to pay through the nose for


the wages of a new hire, they perhaps would cast their net to find a more experienced candidate. Thanks to the previous two Budgets, the NLW has increased by 66% and it is an effect that is being felt in the apprenticeship market which has seen a huge downturn over the last decade. In 2024, 170,000 fewer positions were being offered than a decade ago with SMEs halting many of their training programmes. Chris Houston, managing director of Tadweld, explained: “In 2023 the minimum wage for an apprentice £6/hour.


“While that seems low, apprentices attend college one


day a week and we pay them for that time too. “They’re in training for most of the time they are with


us, so we’ve always seen apprentices as an investment. “However, in 2024 the apprentice NLW increased to £7.50/hr and then in 2025 it increased to £10/hr; that’s a staggering 66% increase in two years. “In 2026 the minimum wage for under 18s will increase again to £10.85 which makes offering apprenticeships exceptionally expensive.” Now the government has put plans forward to introduce funding to make apprenticeship training free for SMEs hiring those under 25 to help cut costs, however this only scraps the current 5% employer contributions for those in training between 19 and 24 years old with those younger already being fully funded. Then combine that with the raise in wages it may do little to correct the issue. As it stands, youth unemployment is at its highest rates since the pandemic (15.3%) and with fewer financial incentives to now develop and train the younger generation, this number isn’t likely to decrease.


MISSED OPPORTUNITIES There has been further criticism as well from industry suggesting Rachel’s plans look to short-term fixes to give the party some breathing space and neglects the long-term picture. Duncan Ferguson, vice president for commercial and industrial printing at Epson UK is one such critic feeling more incentives could have been offered for businesses striving to towards sustainable technology and supply chains.


He said: “We would have appreciated the introduction of a tax relief or enhanced capital allowances for companies that adopt low-carbon manufacturing and energy-efficient systems.


“By doing so the chancellor could have accelerated


Chancellor Rachel Reeves walking with the famous red briefcase


Rain Newton-Smith


The rise in minimum wage gives positives and negatives


the transition to a net-zero economy, strengthen UK industrial competitiveness, and boost investment confidence. “Supporting manufacturers who invest in digital and sustainable production methods would enable a new generation of local, agile businesses to thrive, cutting waste, reducing transport emissions, and revitalising regional economies.” It has been a rough few years for the public. From rises in mortgage rates to the Cost-of-Living Crisis, belts are tighter than ever. For this Budget to indicate economy growth while also be projected to lower interest rates, as well as suggestively place more money in peoples’ pockets, it could be the break the country needed; but at what cost? Well, it seems businesses may be the ones to be taking the brunt of it. Ms Newton-Smith concluded: “With business


investment and profitability now weaker as a result of these decisions, the government must now double-down on leveraging the experience and expertise of enterprise to find the step-change in economic growth that has proven elusive.”


Once again it seems businesses are being asked to cough up the coffers to help stabilise an otherwise volatile economic landscape.


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INCREASED EMPLOYMENT COSTS MAKE IT EVEN MORE EXPENSIVE FOR EMPLOYERS TO OFFER JOBS TO YOUNG PEOPLE AND JOBSEEKERS


- Rain Newton-Smith, chief executive of the CBI


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