CDR'S Bite-Sized Budget Briefing

One hundred and eighteen days since Britain elected a new Labour Government, the Chancellor, Rachel Reeves has delivered her inaugural Budget. The UK’s first female chancellor announced a ￡40 billion tax raiser in what is widely viewed as a defining moment for the new Government.

The first Labour budget in 14 years was heavily pre-briefed to media. Business leaders and investors will now be scrutinising the detail with great interest. In this Bite-sized Budget Briefing from CDR, we highlight the key announcements, business and city reaction? so far and insights from our specialist team.?

Key business takeaways

• The headline rate of national insurance for employers has been increased from 13.8% at present to 15% from April next year. On top of this, the earnings thresholds at which employers start making national insurance contributions, which currently starts at ￡9,100, has been lowered to ￡5,000.?

• The Chancellor also confirmed the National Living Wage will increase from ￡11.44 to ￡12.21 an hour from April 2025. The 6.7% increase will be worth ￡1,400 a year for an eligible full-time worker.??

• Following its introduction during the COVID pandemic, the Chancellor announced a 40% relief on business rates for the retail, hospitality and leisure industry in 2025-26 up to a cap of ￡110,000 per business.?

• The main rate of corporation tax , paid by businesses on taxable profits over ￡250,000, to stay at 25% until next election.?

City and Business reaction so far

• For The Times, Steven Swinford wrote that it was a “huge budget”, with the Chancellor adopting a “shock and awe approach.” For Swinford, the Chancellor’s economic hopes “rely on encouraging businesses to expand and invest — the same businesses which argue that her tax rises will have the opposite effects”.?

• Elsewhere, the Financial Times’ George Parker described the Chancellor’s budget as “a massive political risk” but that the Prime Minister and Reeves are confident that “they will be rewarded politically in the end.”??

• Chris Mason, the BBC’s Political Editor, has commented that the budget saw “Big taxes, big borrowing and big spending” before going on to conclude by asking that the key question is if it will “make enough difference that people think their lives are getting better?”?

• The Telegraph’s Andrew Lilico was critical of today’s Budget, saying that it “promises more of the same mistakes” made by the previous Conservative administrations. According to Lilico, “one must be sceptical that the tax revenues will actually come in”, with these taxes being said to still fail to address the country’s “serious fiscal challenges”

Reeves’ combative style at the despatch box was striking. Quick to show her financial mettle as a former Bank of England economist and - as she laid out bumper tax rises – attacking her Tory predecessors was arguably the best form of defence.

Richard Griffiths, Managing Director, CDR

This may have been the most comprehensively pre-briefed Budget of all time, but even though there were no substantial surprises, the sheer scale of tax increases in particular means the consequences of the event will take some time to digest. The Chancellor's thesis is that by making responsible choices today she can pave the way for future growth; but given the Office for Budget Responsibility continues to forecast only a modest upswing in growth, businesses and workers alike may conclude that pain today is not delivering as much gain tomorrow as they might wish.

Joey Jones, Senior Counsel, Public Affairs