Rachel Reeves’ Tax Increase ‘brought the British back to the 1980s’

Monday 15 September 2025 10:00
| Updated:

Monday 15 September 2025 13:53

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The British job market is perforated as in the 1980s thanks to the tax increase Rachel Reeves, the Head of Reed’s Giant Reed Executive said, as the country’s CBI said is now seen as an unattractive place to invest than five years ago.

James Reed said there was a “severe work drought in the UK” which was “exacerbated by the AI ​​parade and factors such as increasing the contribution of national insurance employers”.

He added that “we might face an inherent job in the same way as we did in the 1980s, except for white collars rather than blue collar workers”.

Reed’s comments have been made as a new survey assigned by the recruitment revealed 22 percent of those who were asked said they would reduce recruitment due to an increase in national insurance.

Data also shows that 15 percent say AI will also reduce their recruitment plan.

In total, 21 percent of the company said that they had implemented recruitment freezing.

‘There is no doubt that tax increases have made it difficult for companies to employ, invest, and grow’

The figures from Reed have been issued a day after a new survey led by CBI revealed that 86 percent of respondents believe the British labor market is a less attractive place to invest and do business compared to five years ago.

Data also shows that 54 percent of respondents rated as ‘less’ attractive while 82 percent hoped that this trend would continue.

Meanwhile, the CBI/Peempemps labor trend survey outlines that labor costs have been identified as the top threat to the current market competitiveness – elected by 73 percent of respondents.

The impact of employment regulations on the second rank flexibility (65 percent), followed by access to skills (58 percent).

According to the survey, the main driver of concern to the cost of employing people is the contribution of national insurance and costs originating from the employment rights bill (each elected by 69 percent and 53 percent of respondents).

Nearly eight out of 10 companies (78 percent) believe that the employment rights bill will achieve growth, investment, work, and/or benefits of discretionary employees.

CBI said this concern had grown since last year when half of the company (54 percent) was worried.

This survey also shows that 27 percent of respondents expect their organization to be smaller than now within 12 months, a little more than the proportion that intends to grow (26 percent).

In a statement, CBI said: “There is no doubt that this new increase in the contribution of national insurance (NIC) and national wages has made the company more difficult to employ, invest, and grow.

“Together, the increase in NIC and the last three national wage increases add additional costs of more than £ 24 billion for business every year.”

An overhaul of ‘time opportunities’ to rearrange the agenda of labor growth

Carmen Watson, Chairperson of Battle, said: “This year’s findings underlined the scale of change in the British labor market and strengthened the urgent need for policies that restore business confidence and support sustainable job creation.

“The fact that 86 percent of respondents feel British have become an unattractive place to do business for the past five years and that 82 percent believe it might be less attractive in the coming years, highlighting clear opportunities for the government to work with entrepreneurs with pro-growth agendas.

“Likewise, 78 percent of companies that are worried about the implications of higher work costs arising from the employment rights bill underlined the importance of ensuring that reforms were carried out in ways that support investment, growth, and safe and useful work.

“The new government reshuffle offers a timely opportunity to rearrange the growth agenda and provide certainty needed by the business.

“In skills, one of the most effective steps is to provide clarity about which types of non-apprenticeship training that meet the requirements for funding from April 2026.

“With 67 percent of respondents said that uncertainty is currently holding a training plan, a greater transparency will help companies to invest in people and skills that will encourage British competitiveness in the coming years.”

‘Britain at risk of damaging its competitiveness’

Matthew Percival, CBI Director of the Future and CBI Skills, said: “These findings send clear messages: unless policy makers take urgent steps to facilitate regulatory pressure and costs, the British risk damaging their own competitiveness.

“Business wants to invest, employ, and grow – but they need a stable and supportive policy environment to do it.

“The cost of labor, regulations, and skills investment is an important field in which action is needed to protect the resilience of the labor market and attractiveness in the UK for the next five years and so on.

“Business recognizes that the employment rights bill is happening. The key question is how to send it in a way that builds consensus.

“The pro-growth landing zone is possible but requires changes to the bill to make meaningful experiments, ensure a practical approach to managing variable clocks, and a reasonable balance between the rights and responsibilities of employers and trade unions.”

‘We need targeted steps to support work’

According to Reed data, job posts on the site dropped 18 percent year to year in August, while applications also dropped 25 percent – although 1.4 percent of the average salary increase.

James Reed, chairman and CEO of the Reed group, said: “There is a severe work drought in the UK, which is exacerbated by the AI ​​parade and factors such as increasing national insurance employers, as we warned, will, negative impacts on recruitment.

“The official figure shows that we are now experiencing a decline in vacancies in the economy for three years – something that I have never seen in my 49 -year -old career.

“I am worried that what we see is partially structural, and that we might face a weakened job in the same way as we did in the 1980s, except for white collars rather than blue collar workers.

“There are several bright points in the horizon, with AI resistant sectors such as social care and hospitality running well, and both entrepreneurs and job seekers expect things to be improved in the coming months.

“But we need the steps that are targeted carefully to support work. That is why Reed takes an unprecedented step to offer a million free job posts at Reed.co.uk.”

The majority of applicants believe that the job market will increase in the future

Reed survey also job seekers report difficult job markets – with two out of five (41 percent) must fight for fewer vacancies.

Of the more than 2,000 requested, 39 percent also said there were too many applicants and 39 percent said the work they were applying for did not pay enough because the cost of living continued to increase.

The third (35 percent) will only leave their jobs for significant salary increases, with more than half (57
percent) Assessing job security in their current role because 51 percent is concerned about the current state of the job market.

Although only two of the five (44 percent) of the level of optimistic graduates about
The future, the majority (61 percent) believe that the job market will increase.

More than a quarter (26 percent) plans to find a new job once that day has arrived.