RE: Richard Saveley YouTube interview16 Jul 2025 10:16
Rachel Reeves’s tax raid has backfired by raising costs for working people, economists have said.
Julian Jessop of the Institute of Economic Affairs think tank said the Chancellor’s decision to increase the minimum wage and employer National Insurance contributions was the “obvious culprit” for the latest jump in inflation.
This would “add to economic uncertainty and the downside risks to spending and investment”, he warned.
“The gap between inflation in the UK and the euro area has widened markedly since last October’s Budget,” he said.
“The obvious culprit is the continued pass through of higher payroll costs following the large increases in employers’ National Insurance contributions and in the national minimum wage.
“It was always likely that these policy choices would backfire on ‘working people’, both by raising prices and cutting jobs. But they are clearly making the Bank of England’s task a lot harder too.”