David Vance SubstackRead More
It seems to me that the Labour Government’s “plan’ to grow the British economy to deliver the “growth” that Starmer promises is like pouring water on a drowning man. It’s misguided on every level and cannot possibly work so the question becomes one of intention. I think this is a WEF inspired administration and it is entirely conceivable that they know the measures they are introducing will throttle the economy and impoverish us. Their intentions are malign.
The Budget has basically crushed growth in the Economy which is hardly a surprise given the punishment beating given to Employers via the NIC hike and the minimum wage increases. Add the additional burdens that Angela Rayner is so proud of and you cannot be surprised that things go badly. Or can you?
A group of Britain’s largest retailers has warned jobs will be lost and prices will rise due to the big national insurance rise announced in October’s Budget. More than 70 businesses including Tesco, Asda and Sainsbury’s all voiced their concerns in an open letter to Chancellor Rachel Reeves, saying the changes mean price hikes are a “certainty”.
Ms Reeves revealed a £25.7 billion change to employers’ national insurance contributions in last month’s Budget, which would increase the rate of the tax and the threshold at which firms must pay.
Now, businesses are claiming the combined raft of packages announced in the budget including national insurance rises, packaging levies and increases to the national minimum wage could cost the industry more than £7 billion each year.
So two things will happen. They will CUT the numbers of people that they employ or reduce their hours and they will raise prices to try and offset the tax take she demands. This will raise inflation regardless of how the BOE tries to disguise it.
All of this was entirely predictable. I believe that economic growth for Q4 will come to a shuddering halt (although the traditional Christmas surge may temporarily delay this) and 2025 will see the UK economy slump. The contrast with the USA under Trump could not be greater.
Ultimately, the key lesson is you CANNOT tax your way into economic growth.
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