During Reeves’ Treasury Committee appearance this morning in which the Chancellor said she supports releasing strategic oil reserves, she also said there is a ‘valid’ argument to be made that she shouldn’t have raised National Insurance:
“Yeah, we did make the decision to increase national insurance in my first Budget and that’s because we needed to properly fund public services including the NHS which got a £29 billion a year uplift and so I do recognise and it’s a valid argument to say that should not have happened but if that didn’t happen we wouldn’t have been able to put the money into the NHS and reduce waiting list and reducing waiting list in the NHS is also good for business because it means that more people are available for work and the workforce is is is healthier. Um, but I do recognize there are particular issues around youth unemployment.”
UK unemployment is now higher than Italy’s…
Private sector activity fell again in the three months to January, sliding to -33 on the Confederation for British Industry’s latest growth indicator. All sub-sectors reported declining activity in the wake of the Budget…
Confidence has weakened across the board. Consumer services are the most downbeat, with a -38 balance expecting volumes to fall, while professional services are also in the red at -11. Distribution and manufacturing sectors are bracing for further falls. CBI deputy chief economist Alpesh Paleja said:
“The UK economy has not experienced a strong start to 2026. While there are tentative signs of stabilisation and resilience in some specific areas, the big picture remains similar to much of last year: businesses remain cautious, households are downtrading and confidence is still fragile. Worrying, our latest surveys show that persistently weak growth expectations are now accompanied by an uptick in price pressures, at a time when inflation is already uncomfortably high.”
Shadow Business Secretary Andrew Griffith added: “The CBI are slow to criticise so when they say business has had a bad start to the year, Labour should listen. The economy is now constipated by the weight of Labour’s Jobs Tax, business rates hike and the red tape UnEmployment Act.” Thank God Reeves was in Davos last week to assure leaders Britain is the ‘best place in the world to invest’…
The UK has been ranked the third most distressed market in Europe, according to the latest Weil European Distress Index which measures companies’ profits, investment levels and cash flow. Only Germany and France score worse. No prizes for guessing why…
Shops are struggling more than they were during the financial crash, with trouble among retailers and consumer goods companies rising to its highest level in Q4 last year since 2009. The report blames Reeves’ two budgets:
“The impact of the Budget continues to affect business and consumer confidence. April’s rise in National Insurance thresholds and increases in National Living Wage will continue to squeeze profit margins for many businesses, while the announcement to freeze income tax thresholds in November 2025, which could remain in effect until April 2031, will erode spending power in future years.”
Meanwhile, UK business confidence dropped to a 3-year low at the end of 2025, according to the Institute of Chartered Accountants. Reeves is keen to get the wealthy and ambitious excited about the UK economy at Davos. Does she realise you can’t just say you’re pro-growth…
Budget Man Torsten Bell’s old outfit has released a new report blaming Reeves’ tax raid for soaring unemployment. The Resolution Foundation points the finger at the £26 billion National Insurance contribution raid, describing it as a “shock” that’s helped push joblessness higher…
The Starmtrooper training ground slammed the minimum wage hikes too:
“The increase in employer NICs and the minimum wage changes introduced in April 2025 both served to raise the labour costs of younger workers relative to older workers. The employer NICs increase affected the cost of employing young workers aged 21 and above because it had a bigger impact on low than high earners, and young people earn less than older workers.”
The report finishes on a solemn note: “Unfortunately, we can’t go back in time and choose a more jobs-friendly tax increase than the employer NICs hike. But the Government can be careful about any further increases in labour costs, especially for young people.” Meanwhile, households’ views on future finances have fallen to a two-year low in December, with views on job security at a six-month low, according to S&P Global. Bell ends up upsetting his former colleagues yet again…
UK youth unemployment has risen at the fastest pace in the G7, according to accounting firm PwC. It’s now at 15.3%, up from 11% three years ago…
Britain is now to 27th out of 38 OECD countries in PwC’s Youth Employment Index – the UK’s worst ranking since records began in 2006. The British Chambers of Commerce is now forecasting that the overall unemployment rate will climb to 5.1% next year as the economy is “stuck in low gear”…
Employing 18-21 year-olds now costs businesses an extra £4,000 since the election thanks to the double whammy of last year’s NICs hike alongside back-to-back rises in the minimum wage. The ‘progressive’ position is now to price young people out of the jobs market entirely…
The UK housing market has stuttered in the wake of last month’s Winter Budget, with potential buyer enquiries falling at their fastest rate in two years. According to a survey by the Royal Institution of Chartered Surveyors (RICS), buyer interest slipped from -24% in October (hardly going gangbusters already) to -32% in November. Just as the briefing chaos in the lead-up to the Budget almost ground the economy to a halt…
RICS chief economist Simon Rubinsohn said:
“The housing market has been struggling for momentum for several months, and the recent budget announcements are unlikely to materially shift that picture… The ending of budget-related uncertainty is welcome, but the fundamental challenges of affordability and elevated borrowing costs will in all probability keep activity subdued in the near term.”
A polite way of saying ‘the mayhem in the Treasury totally screwed the market’…
Speaking to Sky News off the back of Rachel Reeves’ Air Passenger Duty hike, Ryanair chief executive Michael O’Leary said:
“Labour is dependent on those Red Wall seats, and yet every move she makes poisons economic growth and damages the UK’s recovery… it’s the Chancellor who stumbles from policy misstep to policy misstep… I think her policy decisions are incredibly stupid.”