The chief executive of Barclays, CS Venkatakrishnan, has mounted a strong defence of Rachel Reeves’ tax-raising Budget, claiming the UK chancellor delivered an “admirable job” of harmonising spending, borrowing and taxation, despite widespread criticism from business leaders regarding escalating operational costs.
Whilst company executives, particularly in retail and hospitality sectors, warned that increased national insurance contributions would trigger job losses and price hikes, Venkatakrishnan maintained that burden-sharing was inevitable. He emphasised that achieving perfect balance across sectors was unattainable, yet praised the fundamental approach towards fostering economic growth.
The hospitality sector has voiced particular concern, with UKHospitality reporting that the Budget would raise the annual cost of employing full-time staff by £2,500. Simon Emeny, chief executive of Fuller’s, expressed frustration that the hospitality sector faced disproportionate tax increases compared to other industries.
Labour costs remain a critical concern for business leaders. James Baer, chief executive of Amber Taverns, predicted inevitable price increases for consumers to offset rising employment costs. The Office for Budget Responsibility projects that employers will initially pass on 60 per cent of additional tax costs through reduced wages and higher prices, with the remaining 40 per cent being absorbed through decreased profits.
Despite Reeves’ announcement of reduced duty on draught beers, promising “a penny off the pint”, industry leaders remain sceptical. David McDowall, chief executive of Stonegate, described the Budget as “a bitter pill to swallow”, highlighting the challenging context of post-pandemic recovery, energy crisis impacts, and persistent inflation.
The national insurance modifications are expected to generate £26 billion annually before accounting for behavioural changes, though the OBR forecasts this will settle at £16.1 billion by 2029-30. The measures have sparked debate about their long-term implications for employment, with retail executives warning about potential negative impacts on job creation in town centres.
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