Budget tax rises will hinder growth, CBI chief warns

Tax rises in the autumn Budget are undermining investment in companies, the head of the Confederation of British Industry (CBI) warns.

- ALEX DANIEL

Rain Newton-Smith will say in a speech today: “Across the board, in so many sectors, margins are being squeezed and profits are being hit by a tough trading environment that just got tougher. And here’s the rub, profits aren’t just extra money for companies to stuff in a pillowcase. Profits are investment.”

Labour made economic growth a central part of its pitch to voters in the general election and has repeatedly pledged to help boost business investment since entering government.

In the October Budget, chancellor Rachel Reeves announced a nearly £70bn uplift in public spending, partly funded by sharp increases in business taxes like employer national insurance contributions.

Labour also raised the minimum wage, in a move praised by workers’ groups and unions, but which businesses have said will force them to pass on some costs to consumers, hire fewer people or make less profit.

In a speech at the CBI’s annual conference in London, Ms Newton-Smith will point to a recent survey by the body which found almost two-thirds of companies think the Budget will damage UK investment.