Deutsche Banks latest analysis shows some worrying trends about next years tax changes. Rachel Reeves new national-insurance rules might cut around 100k jobs - thats double what government experts thought
The changes (starting from 04/2025) will push employer contributions from 13‚8% to 15%; while dropping the wage cut-off from £9100 to £5000 yearly. Sanjay Raja from Deutsche Bank thinks its gonna hit harder than expected:
Given that the increase in NI contributions is ultimately a payroll tax firmsʼ payroll decisions will come under significant scrutiny going forward
The job-market is already showing cracks; and these changes wont help. Companies will likely slow-down hiring cut some positions and think twice about new staff. The bank thinks pay will also take a hit: instead of 4‚25% growth next year theyre now looking at 3‚75%
Business costs are going up too - about £19bn yearly for private companies. This means: higher shop prices less money for new stuff; and slower growth. Companies might cut their spending by £1‚4bn which isnt great for the economy
The Treasury hopes to get £25bn from these changes. Reeves says its not breaking any promises since its not hitting workers directly but companies will need to deal with extra costs somehow