American bosses are reconsidering their UK investment plans after Rachel Reeves launched a £25bn tax raid on employers, a transatlantic trade body has warned.
Duncan Edwards, the chief executive of British American Business, said the Chancellor’s move to increase National Insurance (NI) costs had made the UK “less attractive”.
As a result, he said his lobby group’s members are now looking to alter their plans amid the threat of higher costs.
“For the UK leaders of American-owned companies looking to get more investment from their head office, their task has definitely just become more difficult as the costs of doing business in the UK will rise,” said Mr Edwards, whose organisation represents more than 400 companies doing business in both the UK and the US.
“Coupled with the Employment Rights Bill this will make the UK less attractive for big American employers.”
It comes just days after Ms Reeves unveiled her £40bn Budget tax raid, which includes a proposal to raise NI contributions from 13.8pc to 15pc in April.
As part of the plan to raise £25bn from employers, the Government is also lowering the level at which businesses have to start paying NI from £9,100 to £5,000.
However, as well as dealing with tax rises, companies have warned that Angela Rayner’s sweeping overhaul of workers’ rights will also cost an extra £5bn a year.
Mr Edwards said the Government’s Employment Rights Bill is a growing source of concern for US companies.
He said: “If American bosses in boardrooms in the states know anything about the UK market, it’s compared to other [European countries] like France and Germany, labour laws are more flexible. So that’s a concern for US companies who already have big numbers of employees here.”
Brent Hoberman, the founder of Lastminute.com, added that the combination of new employment laws and rising NI costs will “make people think more about hiring more people and where to hire them”.
He added: “We are not at French levels yet, but it is a combination of things with the new employment laws that will need to be watched.”
Fears of higher taxes have already led to a drop in investor sentiment in recent months, with hundreds of entrepreneurs threatening to quit the UK in favour of more attractive fiscal regimes abroad.
However, warnings of a potential exodus recently led to a fierce reaction from Dale Vince, the top Labour donor.
He told The Telegraph last weekend that any rich people threatening to move overseas in order to avoid tax rises should “f— off”.
When asked about bosses complaining about the Budget, he added: “Don’t bleat, just knuckle down and let’s grow the economy.”
