Rachel Reeves is finished – she’s just done the one thing we can never forgive | Personal Finance | Finance
Since Rachel Reeves came in at number 11, growth has stalled, debts have risen, companies have collapsed and business confidence has eroded. We’ve seen the winter fuel chaos, the benefit cut revolt, the farmers’ inheritance tax debacle, the pension inheritance tax raid and £66bn of new taxation. But as I wrote on Sunday, his worst decision was to increase employers’ National Insurance by £26 billion from his first budget.
Reeves assumed businesses would absorb the cost quietly. They won’t. The Office for Budget Responsibility has warned that three-quarters of this will ultimately fall on workers through low wages and high prices. At the same time, Reeves raised the National Living Wage well above inflation. Twice. This situation further increases employer costs.
Take Tesco, the UK’s largest private employer, with around 350,000 employees. The combination of NI and pay rises will cost him £430 million a year. This will be met by reducing costs and increasing food prices, and every supermarket is doing the same. Just what we need as the cost of living crisis intensifies.
If giants like this feel the pressure, imagine the impact on smaller firms. Today we received confirmation of the damage done by Reeves, with unemployment rising to a five-year high in the three months to December.
For years, Britain’s greatest economic strength was its flexible labor market. Hiring and firing were relatively simple. This gave employers the confidence to take risks on new staff. This set us apart from much of Europe, which is over-regulated. Then Reeves arrived.
When Labor won in July 2024, unemployment was at 4.1%. Now that rate has climbed to 5.2%, the highest level since early 2021 when the pandemic locked down the UK. As accounting group PwC puts it: “Payroll employment is falling, unemployment is rising and layoffs are rising.”
This is happening just as artificial intelligence threatens millions of jobs, especially for entry-level workers. As vacancies decrease, life is already hell for young people looking for work. Labor has chosen this time to make it much more expensive to recruit them.
This isn’t the only way Labor is dealing a blow to the job market. Angela Rayner also steps in. The upcoming Employment Rights Bill will add another £5bn to the cost, making it harder to fire underperforming staff and further deterring firms from taking the chance on new hires.
Labor childishly views private sector bosses as evil capitalists who must be destroyed. Even if it comes at the cost of countless jobs.
Britain’s flexible job market was once a major competitive advantage. Not anymore. As technology reshapes the world of work, the harshest consequences will fall on young people, school leavers and heavily indebted graduates facing a shrinking job market. Our children and grandchildren will carry the scars of this throughout their lives.
Young voters once flocked to Labour. They won’t forget when they realize this ruined their life hopes. They will not forgive in the next election either.
