“Is Rachel Reeves Regretting What She Did?” | Businesses Nearing Collapse Soar Under Labour

The number of businesses on the verge of collapse has skyrocketed under Labour’s leadership, leaving many questioning Rachel Reeves’ handling of the economy. Following her tax-raising budget, concerns are growing that 2025 could mark a breaking point for thousands of struggling UK businesses.

In the final quarter of 2024 alone, nearly 47,000 firms were identified as being in critical financial distress—up sharply from 31,000 in the previous quarter. Hardest hit are hotels, leisure companies, retailers, and even major corporations like Sainsbury’s, which announced plans to cut up to 3,000 jobs. Signature Group, a prominent hospitality business, revealed that many firms are simply trying to survive, coining the grim slogan: “Survive 25.”

Experts point to a combination of factors creating what some are calling a perfect storm. Rising National Insurance contributions for employers, higher minimum wages, increased borrowing costs, and a lack of market confidence have put immense strain on businesses. For smaller companies, which are the backbone of the economy, the impact has been particularly devastating.

Speaking on the issue, insolvency specialists warn that 2025 could be a “watershed moment” as more businesses decide they cannot continue.

Adding to the pressure is the growing exodus of wealthy individuals. Reports show that 10,800 millionaires left the UK in 2024, compared to 2023. These high-net-worth individuals, who collectively contribute substantial amounts in taxes, are leaving due to higher tax burdens and a general sense of pessimism about the country’s future.

Critics argue this is the result of what they call “the politics of envy,” warning that targeting the wealthy could have long-term consequences for the economy. Millionaires contribute disproportionately to public services, with the top 1% of earners already paying nearly 29% of all income tax. Losing them could create a significant financial gap for the Treasury.

Some experts suggest that Reeves’ approach to generating revenue, particularly through employer National Insurance hikes, was misguided. Many believe a small wealth tax targeting the ultra-rich could have raised similar funds without hitting businesses so hard. However, others warn this could further drive away entrepreneurs and investors.

Reeves’ critics say her early focus on austerity-like measures, such as maintaining child benefit cuts and reducing winter fuel allowances, failed to provide hope or optimism for a weary public. “People were already beaten down,” one commentator said. “After years of Brexit turmoil, a pandemic, and austerity, they needed a government offering vision and positivity.”

In a twist, Reeves has recently called for a “dose of Trump positivity,” citing the former U.S. president’s confidence and focus on national pride. Commentators argue that such optimism needs to come from government leadership, not just the public. Reeves has been criticized for setting a gloomy tone during her first weeks in office, which many believe has only deepened market uncertainty.

With the economy under immense strain, businesses are calling for urgent action to rebuild confidence and ease the financial burdens they face. Whether Labour will adapt its approach remains to be seen, but for now, the outlook appears bleak for many UK firms.

The question remains: can Reeves and Labour find a way to turn things around, or will 2025 mark the collapse of confidence in their economic leadership? Only time will tell.