Rachel Reeves poised to turn screw with with NICs hike as expert sends huge warning

Britain’s businesses are bracing for impact as Labour’s National Insurance hike lands with a thud this week. The Chancellor’s decision to crank up employer contributions while dramatically lowering the threshold spells trouble for firms already struggling with razor-thin margins. This isn’t just another tax increase – it’s a direct hit on pay packets and job prospects that could stall our economic recovery before it even gets started.

The numbers tell a grim story. A small cafe employing five staff on £25,000 will now face an extra £3,000 in annual costs overnight. For larger employers, the bill runs into hundreds of thousands. These aren’t abstract figures – they’re the difference between keeping staff on full hours or cutting back, between investing in growth or just struggling to survive. The hospitality sector, still reeling from pandemic losses and energy price shocks, will be particularly hard hit, with many family-run businesses facing impossible choices.

What’s most troubling is the timing. With inflation still biting and consumer confidence fragile, this tax rise risks becoming the straw that breaks the camel’s back. When businesses pass these costs on – as they inevitably must – it will mean higher prices in shops, restaurants and services across the board. The government’s minimum wage increase, while welcome for workers, now risks being undermined by the very policies meant to support them.

There’s a dangerous disconnect here between Westminster rhetoric and business reality. While ministers talk abstractly about “tough choices” and “long-term plans”, family firms are staring at spreadsheets trying to work out how to make the numbers add up. The Chancellor may see £25 billion in future tax receipts, but business owners see potential disaster – fewer jobs, reduced hours and another blow to Britain’s productivity.

The coming months will reveal whether this gamble pays off or backfires spectacularly. One thing’s certain – if job losses mount and prices keep rising, voters won’t forgive a government that promised economic competence but delivered another self-inflicted wound. The question isn’t whether we’ll feel the pain of this decision, but how severe it will be – and who will pay the heaviest price.