#budget-policy

#budget-policy

A £5 billion tax raid on salary sacrifice pension schemes announced in Rachel Reeves's Budget has emerged as the single most damaging policy for business confidence, according to new research from the Confederation of British Industry. Almost three-quarters (73%) of companies surveyed by the CBI said the move to levy national insurance contributions on pension salary sacrifice above a new cap was the most harmful measure in the Budget, warning it risks deterring workers from saving for retirement and disproportionately hitting middle earners.

The Bank of England expects Rachel Reeves's budget will reduce the UK's headline inflation rate by as much as half a percentage point next year. In a boost for the chancellor after last month's high-stakes tax and spending statement, Clare Lombardelli, a deputy governor at the central bank, said its early analysis showed the policies would lower the annual inflation rate by 0.4 to 0.5 percentage points for a year from mid-2026.

As she stood at the dispatch box, Reeves opens by saying it was deeply disappointing and a serious error on their part, meaning the OBR. We are rebuilding our economy, she says, pointing to trade deals with the US, India and the EU, planning reforms, an overhaul of the visa system and a change of fiscal rules to raise public investment to a four-decade high.