Several UK businesses are pausing recruitment as they await the chancellor's Budget announcement on Wednesday, with company bosses citing mounting employment costs as the barrier to expansion. A publisher from Tavistock, Devon, said he was holding back from filling two new positions at his firm because of the cost of taking on new employees. Tim Randell, who runs Links Publishing, said he had positions he wanted to fill and wanted to expand and grow his business, but was holding back because of employment costs.
The pressure on firms stems from policy changes announced in the 2024 Budget. Companies now have to pay National Insurance at 15% on salaries above £5,000 from April 2025, up from 13.8% on salaries above £9,100. The legal minimum wage for over-21s also rose from £11.44 to £12.21 per hour from April 2025. At the Devon Business Show, some firms said they had been struggling for the past two years to deal with these increases.
Business leaders are making clear what they want from the chancellor. Michelle Bunker from WGP Maintenance in Plymouth said she had one clear message for the government: "I want to see National Insurance contributions starting to go down." Kevin Miller, the boss of Apex HR in Plymouth, said small businesses were "the backbone of the whole economy" and needed help, calling for tax relief to reduce the cost of employing people.
The hospitality sector is also pushing for support. Tens of thousands of people are employed in hospitality and catering in Devon, and hotel bosses said the industry had been going through a tough time. People working in hospitality, spearheaded by celebrity chef Tom Kerridge, have long been campaigning for a reduction in VAT for pubs and restaurants from 20% to 10%. Pete Adams, general manager at the Moxy Hotel in Plymouth, said a VAT cut "would allow us to pass some of those savings on to the customer" and could increase spending.
The government said it was "on the side of business". HM Treasury said the chancellor was giving firms the breathing space to invest and grow, with business rates cuts, a cap on corporation tax, £4.3 billion of support to limit bill rises, and employer National Insurance contributions relief when hiring under-21s and apprentices under 25. However, Chancellor John Healey has refused to rule out tax increases after acknowledging government borrowing costs are at "historic highs".
For savers, borrowers and businesses, the Budget decisions on employment costs will directly affect whether firms can expand and hire, which influences wages, spending and the broader economy.