In a small-but-busy workspace in central England Andy Bass looks through his companys financial projections with growing un-ease. His family-run uniform-making business (started by his grand-father after WW2) now faces tough times due to new tax rules
The source of Bassʼs worries: Chancellor Rachel Reeves recent budget brings a £25bn employer tax increase and un-expected minimum wage jump starting 04/2025. “Its going to be very difficult for business‚“ Bass explains; his company which makes uniforms for big names like Jaguar expects their profits to drop by 50%
The wider business world shares these concerns. Rain Newton-Smith from CBI says companies are now in damage-control mode: almost 2/3 of them cutting back on hiring. Deutsche Bank thinks these changes might kill around 100‚000 jobs
Current data shows troubling trends in UK employment:
- 9.2m working-age people neither working nor job hunting
- 2.8m people off work due to long-term health issues
- About 946k young people not in work education or training
- Youth numbers keep rising - highest in almost 10 years
It is the worst possible time to be doing tax rises and may result in economic inactivity rising
The new rules hit young workers extra hard. Starting next spring an 18-year-old on minimum wage could earn same as a fresh uni graduate (around £25k) - making employers think twice about entry-level hiring. Anna Leach from Institute of Directors points out: “When costs go up its always the most vulnerable who get hit first“
Companies are now looking at different options including using AI instead of hiring new staff. Stephen Evans from Learning & Work Institute notes that with less people doing apprenticeships or part-time work while studying the situation gets even harder for young job-seekers