Tax Hikes Under Labour Leave UK Firms Facing Collapse Amid Financial Crisis

[Social Media]

 

Businesses across the UK are grappling with unprecedented financial strain, with a staggering 50 per cent surge in firms teetering on the brink of collapse. This dire situation has intensified under Labour's leadership, sparking criticism of Rachel Reeves’ tax-raising Budget, which some argue could push struggling companies past the point of recovery.  

 

The warning comes as insolvency specialist Begbies Traynor reported a sharp rise in businesses facing “critical financial distress” in the final quarter of 2024. Executive chairman Ric Traynor described the current climate as desperate for many firms. "For many of these companies, the situation is dire," he said. "This additional burden will almost certainly result in business leaders taking the decision to, at best, reduce headcount or, worse, wind down their operations in the face of insurmountable challenges."  

 

Traynor further cautioned that 2025 could become a pivotal year, potentially marking the closure of thousands of UK businesses that have fought to stay afloat amidst weak consumer confidence, rising borrowing costs, and the aftershocks of Labour’s tax measures.  

 

Labour's £25 billion increase in employers' National Insurance contributions, paired with a hike in the minimum wage, has been labelled a potential "last straw" for many struggling businesses. Critics have pointed to these measures as exacerbating the challenges already plaguing sectors such as hospitality, leisure, and retail. The “Red Flag alert” issued by Begbies Traynor revealed that 46,853 businesses were at serious risk of collapse in late 2024, up from 31,201 in the previous quarter.  

 

Adding to the economic turmoil, the private sector shed jobs in January at the fastest rate since 2009, excluding the pandemic. The purchasing managers' index compiled by S&P Global attributed this decline to the NI hike and what it termed a "post-Budget slump in business confidence." The Signature Group, which operates bars, hotels, and restaurants, echoed these concerns, stating that many businesses are now focused solely on "surviving '25."  

 

Meanwhile, Rachel Reeves has faced mounting scrutiny over her economic policies. While she attended the World Economic Forum in Davos to champion British growth prospects, critics have highlighted the disconnect between her optimistic rhetoric and the reality on the ground. They argue her Budget has inflicted significant damage, compounded by the introduction of new workers' rights that some see as adding further weight to businesses’ burdens.  

 

The latest economic data paints a bleak picture, with private-sector activity stagnating and job cuts accelerating for the fourth consecutive month. Additionally, retail sales continued their decline in January, marking the fourth month of downturn for the high street. The Confederation of British Industry predicts little improvement for February, reinforcing fears of a prolonged economic slump.  

 

As firms across the country confront these growing challenges, the strain on Labour's economic policies becomes increasingly apparent. Many warn that without urgent action, the cost of these measures could be catastrophic for the UK economy, leaving thousands of businesses unable to weather the storm.

 

Based on a report by Daily Mail 2025-01-27

 

 

[JonnyF]

5 hours ago, Social Media said:

Meanwhile, Rachel Reeves has faced mounting scrutiny over her economic policies. While she attended the World Economic Forum in Davos to champion British growth prospects, critics have highlighted the disconnect between her optimistic rhetoric and the reality on the ground.

 

Shameful.

 

Rachel from accounts hobnobbing in Davos while the country fails under her budget for recession. 

 

The UK is going down the toilet under this pathetic government. 

[The Cyclist]

3 hours ago, JonnyF said:

 

Shameful.

 

Rachel from accounts hobnobbing in Davos while the country fails under her budget for recession. 

 

The UK is going down the toilet under this pathetic government. 

 

Just wait until Chomper gets here.

 

He will lambast you for peddling fake news 😀😀

[billd766]

12 minutes ago, The Cyclist said:

 

Just wait until Chomper gets here.

 

He will lambast you for peddling fake news 😀😀

What is fake about the truth.

 

Rachel from accounts will get paid and a fat civil service pension whatever happens, so why should she care?

[James105]

9 hours ago, Social Media said:

Labour's £25 billion increase in employers' National Insurance contributions, paired with a hike in the minimum wage, has been labelled a potential "last straw" for many struggling businesses.

 

Imagine a company that has operated for 119 years and survived World war 1, survived through world war 2, the winter of discontent in the 70s, the global financial crash of 2008, only to be faced with Rachel from Accounts and this joke of a government which in just 6 months of economic mis-management has forced it to shut down after all this time.   Well done Labour.  Absolute clown show of a government.   

 

https://www.msn.com/en-xl/news/other/family-run-bakery-blasts-rachel-reeves-for-closing-after-119-years/ar-AA1xTuC2

[Briggsy]

15% Employer's NI with a lowered threshold is very painful for employers. Add to that the 0.5% Apprenticeship Levy (just another tax) that all but the smallest employers are saddled with.

 

It makes employing people in the UK fraught with expense. I have not even gone on to mention the changes to SSP (another employer expense, people think it comes from the government, it does not) and changes to employment law such as flexible working and working from home. Why employ people in the UK if it can possibly be done overseas?

 

Inflation will rise, public borrowing will rise, growth will continue to flatline.

[The Cyclist]

6 minutes ago, billd766 said:

What is fake about the truth.

 

Nothing.

 

That wont stop some engaging in denial, obfuscation and whataboutery to try and hide that truth.

 

7 minutes ago, billd766 said:

Rachel from accounts will get paid and a fat civil service pension whatever happens, so why should she care?

 

Agreed.

 

And that is one of the reasons the UK is heading down the S Bend.