UK businesses brace for impact as tax hikes loom

CGTN Europe

Like many other pubs, long considered pillars of British community life, The Gunnersbury has felt the pinch of the Autumn Budget on its finances and future.  Read more: https://tinyurl.com/mrx7hkr7  #UK #AutumnBudget #Pubs

Transcript

00:00Pop culture has long been at the heart of British life, but now many are bracing for

00:06a challenging winter after October's budget, the first by the Labour government, which

00:11took office in July. This pop in West London, still repaying COVID-era loans, may face an

00:18additional US$3,000 in monthly costs due to rises in contributions to each employee's

00:25social security tax, known in the UK as NI or National Insurance. The owner says customers

00:32were already pulling back on spending well before the tax hikes.

00:37It's already impacted on businesses like ours and hospitality across the UK. Quite what

00:46happens going forward is difficult to discern or understand given the thresholds on the

00:54NI rising. And do you think it's going to impact your plan for hiring more people in

00:59the future? We'd like to hire two people, but it's probably more financially sensible

01:06for us to hire in as and when we need, and that company can deal with the NIC. Recent

01:13research from the Nighttime Industries Association shows the hospitality sector supports over

01:192 million jobs in the UK. 90% of businesses surveyed report financial struggles. And it

01:26is not just pops. Many companies are bracing for the budget's impact. Starting in April,

01:32the rate employers pay in National Insurance contributions will rise by about 1.2%. In

01:38the meantime, the threshold at which employers will start paying it has been lowered, which

01:43means businesses must start their National Insurance contributions from about US$6,300

01:50of an employee's earnings. The government is providing financial support for businesses

01:55through a scheme called the Employer's Allowance, but many worry this will not be enough. The

02:01UK's finance minister says the increases are necessary to fill a $50 billion black hole

02:07in public finances. If you take the measures that I set out in the budget in the round,

02:12it's good for jobs and it's good for growth. Experts say despite the tax rises, the UK

02:18remains competitive compared to other European countries for now. If we were to compare this

02:24with other countries, particularly in Europe, such as France and Belgium and Italy, the

02:30social security costs, or the NIC costs as we call them here, those are comparatively

02:35lower here. But if this continues and there's extra taxes on employers, then those advantages

02:41diminish and fall away. Richard Riff's promised not to raise the taxes again. I think a gain

02:47has to be taken with a pinch of salt. I mean, I don't know how someone so early on in the

02:54parliament can actually make those pledges. As pops and small businesses navigate these

02:59rising costs, many are uncertain if they will survive to see the rosier times the government

03:05is aiming for. Lee Jianhua, CGTN, London.

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