UK Budget Impact: A-Level Business In The News

Have a go at this teaching activity, which includes a downloadable worksheet and suggested answers.

What's the story?

The first Labour budget since 2010, delivered by chancellor Rachel Reeves, has left UK businesses facing significant tax increases, particularly affecting their hiring plans and growth prospects.

Marie Cooper's Midlands engineering firm CBE+ which manufactures parts used in several sectors including health, aerospace and the automotive sector, exemplifies the impact. Her 85-employee business faces an additional £30,000 in national insurance contributions (NICs) due to two key changes: a 1.2 percentage point increase in employer contributions and a lower threshold for payments (reduced from £9,100 to £5,000 annually per worker). As a result, Cooper expects to hire two fewer people next year.

The budget includes £40bn in overall tax hikes, primarily targeting businesses. While smaller companies benefit from a doubled employment allowance (£10,500, up from £5,000), industry groups express concern about combined pressures:

• The British Retail Consortium projects retailers will face £2.3bn in extra NICs costs
• Business rates relief for hospitality will decrease from 75% to 40%
• The national living wage will rise to £12.21/hour for over-21s

Business leaders, including the British Chambers of Commerce's Shevaun Haviland, note this conflicts with Reeves's pre-election promise of the most "pro-business" government in history. The Office for Budget Responsibility estimates these changes could reduce business investment by £25bn.

The government defends the increases as necessary to fund public services and research investment, though businesses warn of potential impacts on hiring and growth.

UK Budget – Business impacts