Executives from some of Britain’s most influential companies were ushered into Downing Street on Wednesday evening as Sir Keir Starmer sought to cement ties with business ahead of what is expected to be a painful tax-hiking Budget later this month.
CEO of NatWest, the banking giant; FTSE 100 software group Sage; Marks & Spencer; housebuilder Taylor Wimpey; and renewable power station Octopus Energy were among the guests invited to No. 10 for an informal reception with the Prime Minister. The gathering was part of an effort to calm jitters in Britain’s economy as the Treasury prepares a budget aimed at plugging a £30 billion hole in the public finances.
Chancellor Rachel Reeves will make her statement on November 26th – and expectations are grim. Businesses are preparing for a new round of tax hikes even as relations between government and industry are already strained.
Reeves’ first budget, presented in October last year, sparked anger after employers’ national insurance and the minimum wage were raised, significantly driving up costs for businesses. For many bosses, the announcement torpedoed much of the goodwill Labor had rebuilt with industry after a fractious relationship with business under Jeremy Corbyn’s leadership.
Labor had worked hard before the general election to reposition itself as the party of economic stability and pragmatic growth. Starmer and Reeves conducted a series of charm offensives with FTSE leaders, private equity firms and entrepreneurs, promising political stability in contrast to the turmoil of previous Conservative governments. Much of that capital, however, was spent on Reeves’ inaugural financial report.
Since then, the Chancellor has repeatedly pointed out that further “difficult decisions” are unavoidable if the government wants to repair public finances. In a speech earlier this month, she warned that “each of us must do our part to ensure our country’s security and our country’s bright future” – a sentence widely interpreted as a prelude to broad tax increases.
Measures reportedly being considered include an income tax increase that would breach Labour’s own manifesto commitments; a crackdown on limited partnerships favored by law and accounting firms; and restrictions on pension schemes foregoing wage sacrifices, which would drive up employer costs even further.
Downing Street declined to comment on the guest list or discussions at the reception. But for many in the city, the message is already clear: the government wants business on its side before asking it to shoulder another share of the tax burden.
