Deutsche Bank warns: New tax changes could hit UK job market hard
Deutsche Banks research shows upcoming national insurance changes might affect employment more than expected. New tax rules starting next spring could impact both jobs and prices in shops
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
