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Economists Horrified At The Damage Reeves Is Doing.....
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//I'm talking about real economists, by the way. Not pretend ones with implausible CVs.
People like Dr Andrew Sentance, independent business economist and former member of the Bank of England’s Monetary Policy Committee.
He's horrified by the damage Reeves is inflicting warning that: "Lack of confidence in financial markets is a big issue for Rachel Reeves. But she shows no interest in the issue and ploughs on regardless."//
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Simple, the BBC have maanged to find a couple of companies, who have business models that can wear it.
In reality larger compaies will simply freeze recruitment, fire a few if not enough and carry on. Smaller copaies cant do that obvioulsy so will go to the wall unless they can get away with putting their prices up.
“Indeed, but I'd not seen the change in rates mentioned before. That just adds to the burden.”
A quick calculation I performed on the back of an envelope when the NI changes were announced revealed this:
An employer employing somebody for 30 hours a week on the National Living Wage will currently pay them £343.20 per week and they will pay employer’s NI (ENI) contributions of £23.21. From April they will have to pay them £366.30 per week and pay £40.55 ENI. The employer’s bill for that person will increase by £2,100 a year – an increase of over 11%.
It is true that some of this increase will be offset by an increase in the NI “Employment Allowance”. This allows employers to reduce their NI bill by £5,000 in a year and that allowance is increasing to £10,500. It is designed principally to help small employers, but even an employer with as few as seven employees on the living wage will see their NI bill increase.
“This morning's BBC Business spoke to bosses of two medium-sized businesses; a holiday company and a nationwide estate agent. Both of them said business was booming (15-20% increase this year).”
Business may well be booming. But they will still be subject to these measures and in some respects they will hit them harder than those small businesses employing lower paid workers.
As a quick example, a business employing 100 people on an average of £40,000 a year will see its ENI bill rise from £443,000 to £538,000 – an increase of £95,000 a year or more than 21%. This is without any pay rises and are simply the effects of the October budget.
These are stupendous amounts of money to extract from any business of that size. Taking an additional tax of almost £1,000 per employee is not sustainable without either a rise in prices or a reduction in headcount – or both.
Unfortunately the people making these decisions haven’t the first clue about business or how it works. I doubt they’ve even performed a few basic sums as I have here. They are utterly clueless and to speak of economic growth as their No.1 priority is simply taking the electorate for fools.
The Truss/Kwarteng budget had far, far more chance of producing economic growth than the slapdash “tax, tax, tax” strategy employed by this bunch of clowns. As well as that, the economic indicators that hit the fan following that effort (which was never enacted) are every bit as bad, if not worse now that the effects of the Reeves fiasco have sunk in.
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