Bank of England governor Andrew Bailey has said retailers are right to warn the government of potential job cuts due to tax rises unveiled in the Budget.
The governor appeared before the cross-party Treasury select committee yesterday (19 November), after nearly 80 retail bosses wrote to Chancellor Rachel Reeves to warn that increasing costs would make “job losses inevitable, and higher prices a certainty”.
Bailey told MPs retailers were “right” to raise the issue, adding that depending on how businesses respond, the National Insurance rise could lead to more job cuts than the 50,000 roles predicted by the OBR.
However, Reeves and Starmer have defended the plans.
In response to the letter, organised by retail trade body the BRC, a Treasury spokesperson said: “With our public services crumbling and an inherited £22bn fiscal black hole from the previous government, we had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability to allow businesses to thrive.
“By doing this, more than half of employers will either see a cut or no change in their national insurance bills, there will be £22.6bn more for the NHS and workers’ payslips will be protected from higher tax.”
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The news comes as it emerged that Treasury officials contacted retailers after discovering plans for the letter criticising the Chancellor’s plans, the Telegraph reported.
Retailers are thought to have been contacted by the Treasury last week to discover whether they intended to support the letter, with one industry insider suggesting the government had been thrown into a “tizzy”.
However, when asked whether the Treasury had attempted to discourage retailers from signing the letter, the Prime Minister’s spokesman said: “I’m not aware of that.
“Obviously you’ve seen vast waves of reaction to the Budget, as you do with all fiscal events, and this is no different.”
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