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UK’s rising employment costs could drive business abroad, says Centrus CEO
On this week's episode of Yahoo Finance Future Focus, our host Brian McGleenon speaks with Centrus CEO Phil Jenkins to discuss the impact of the UK government’s decision to increase employer national insurance contributions from 13.8% to 15% from April.
The financial advisory's boss claimed the policy change, combined with a cut in the threshold for employer contributions from £9,100 to £5,000, will disproportionately affect businesses employing lower-wage workers – particularly in the struggling hospitality, retail and high street sectors.
Jenkins said recent economic confidence and PMI surveys suggest business sentiment has plummeted to levels not seen since the first COVID-19 lockdown, indicating that the economy is contracting rather than growing. He argued that this shift, widely seen as a "tax on employment", could deter businesses from hiring or expanding, especially when compared to more tax-friendly jurisdictions abroad.
Keir Starmer’s ambition to make the UK the fastest-growing economy in the G7 appears to have been quietly sidelined amid the government’s recent struggles, he suggested. He also referenced a pre-budget report from the Tax Institute ranking the UK 34th out of 38 OECD nations in tax competitiveness, suggesting that the country’s attractiveness for businesses and investors is diminishing. Jenkins warned that this could accelerate the exodus of high-net-worth individuals and businesses to more favourable locations like Dubai or Portugal. With tax burdens rising and economic growth stalling, he concluded that the UK faces significant challenges in restoring its reputation as a competitive and business-friendly economy.
