Rachel Reeves torn apart in Budget nightmare just days before huge speech

Scores of lifeblood British businesses have turned their backs on Labour, saying the Government is "strangling the life out of the economy".

Crippled by damaging tax rises, two-thirds of bosses say they have been negatively impacted by National Insurance and minimum wage hikes, leaving some petrified about keeping their heads above water.

And in a devastating eve-of-Budget verdict, most said they would not back Labour in a snap election.

The unequivocal judgement on Chancellor Rachel Reeves and her economic competence comes in a high-level report by MyWorkwear - the results of which are published exclusively by the Express - which took the temperature of 128 business leaders still reeling from last year's Autumn Statement and petrified at what will be unleashed on Wednesday.

Shadow Chancellor Sir Mel Stride said: "Rachel Reeves' very first Budget introduced a £25billion Jobs Tax that made it more expensive for businesses to hire, especially young people. That's the contradiction at the heart of Labour's plan: they talk about opportunity, but their policies kill jobs.

"You don't get more people into work by punishing the very businesses that hire them. Reeves' choices have seen unemployment at its highest since the pandemic and business confidence hit a record low - and that's even before the Employment Rights Bill has come in.

"The employer NICs raid wasn't just another tax rise - it's always been a ticking time bomb for our economy. Despite saying she'd wiped the slate clean and wasn't coming back for more - more tax rises loom."

Employer National Insurance increased from 13.8% to 15% in April, with the threshold dropping from an annual salary of £9,100 to £5,000, meaning firms now pay a higher rate on more of an employee's salary.

Some 84% of companies quizzed want to see a U-turn, with two-thirds saying that NICs and minimum wage increases have had a negative impact.

It has left almost half of the firms (47%) worried they will struggle to survive the next five years.

The nationwide snapshot - described as a barometer of business sentiment - surveyed chief executives to glean insight into the deepening gloom and into what next year might look like.

But the results give the clearest sign yet that once buoyant firms have seen belief drain away.

Leaders from all sectors of the economy - including manufacturing and engineering, construction, hospitality, healthcare and agriculture - said the hike in National Insurance contributions had been particularly damaging, with 66% saying they have been negatively impacted.

Since last year's Autumn Statement, the business fortunes of 22% of respondents had worsened, and there was no change for 32%.

Labour's approach to business prompted a 50/50 split when bosses were asked whether they were pleased.

However, when asked whether they would vote for a party other than the current Government if an election were called tomorrow, an overwhelming 75% of respondents said yes.

James Worthington, Managing Director of MyWorkwear, said: "When we asked about the impact of NICs and the employee rights Bill in our survey in February, 72% of respondents feared a negative change, and these latest results prove that they were right to be worried.

"As a workwear provider, we tend to be a great bellwether for the economy, and we are seeing firsthand how businesses are struggling and having to contend with an incredibly challenging time.

"With the Budget looming on the horizon, the results indicate the current Government can't afford to get on the wrong side of business again with new tax rises and more regulation.

"Three quarters already appear to have had enough of current policies and feel they are strangling the life out of the economy."

Battered businesses say they want the freedom and tax incentives to take on more apprentices to make the UK a global manufacturing powerhouse once more.

They say skills remain their number one priority, but training budgets have been torpedoed because of rising inflation, National Insurance costs, and wage rises.

Separate analysis by financial by Xeinadin, which provides accountancy services and business advice, found businesses are crying out for stability over stimulus in the Budget.

A poll of 600 decision-makers found that 75% expect higher taxes or costs from the financial statement, and only 11% plan to hire in the next year.

Notably, 37% of plans raise prices, while 32% are already slashing costs.

Meanwhile, research commissioned by independent law firm WSP Solicitors reveals more than one third of 2,000 UK family businesses risk closure before the next general election in 2029, while one in 10 expect to shut down in less than 12 months.

Nearly 20 per cent say they will have to act sooner and either sell up, close down, or move abroad if the Budget brings more tax hikes.

Julian Jessop, Economics Fellow at the Institute of Economic Affairs, said: "This year's Budget is set to be just as painful as the last. The Chancellor will attempt to fill a new hole of perhaps £30 billion with broad-based increases in taxes on income and from a dog's breakfast of many smaller measures.

"This hole is not entirely of the Chancellor's making. Most of the shortfall reflects a downgrade to the OBR's projections for trend productivity growth, which is arguably long overdue. She will also want to increase the buffer against future shocks by raising the fiscal headroom above the low levels inherited from the previous government.

"Nonetheless, this should have been done by curbing the growth of spending, rather than by increasing the tax burden even further. Relying on a dog's breakfast of many smaller tax changes is also more likely to backfire."

A Treasury spokesman said: "We are a pro-business government that has capped Corporation Tax at 25%, the lowest rate in the G7, we're reforming business rates, have secured trade deals with the US, EU and India, and have seen interest rates cut five times since the election, benefiting businesses in every part of Britain."

"The tax decisions we took at the Budget last year mean that we have been able to deliver on the priorities of the British people, from investing in the NHS to cutting waiting lists and putting more money in their pockets with a wage boost for millions."