Even if the she can't change course, the Chancellor needs to listen to businesses
Economically, the Chancellor should reverse her decision. Politically, however, she would be mad to do so Employers’ NI is a jobs tax – businesses pay it for employing someone. You don’t need to be an economist to understand why raising that cost has a negative impact.
These critiques are correct, and the damage done is real. The impact of the NI rise was factored into business decisions from the moment Reeves delivered her Budget. New jobs will already have been cancelled as a result. The knock-on effect on investor and consumer confidence is only just beginning, and the impact on profitability, growth and tax receipts will follow.
It’s less than five months since Labour won that huge landslide. I know it feels like longer, but it’s early days. They are still laying out their agenda, and establishing the way they intend to govern. All are keenly watching and learning from how the Keir Starmer Government acts. How it performs under pressure is particularly instructive.
If you know that your first struggles must be won, because they define if you are a signpost or a weathervane, then you would be well advised to choose things that you are happy to be defined by. Instead,So for all the errors of the national insurance policy, the Chancellor cannot possibly back down now, even if she wanted to .
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