Millions of workers warned to expect 'smaller pay rises' this year
Workers have been warned to expect "smaller pay rises" after the new Labour Party government's Budget. Chancellor Rachel Reeves has spoken out with an update on Thursday morning, fresh from her Budget and Autumn Statement on Wednesday.
The Labour MP admitted the budget is likely to mean smaller pay rises for workers because of the impact on businesses. “I recognise there will be consequences,” Reeves told BBC Breakfast. “It will mean that businesses will have to absorb some of this through profit and it is likely to mean that wage increases might be slightly less than they otherwise would have been.”
The Office of Budget Responsibility (OBR), which provides independent fiscal oversight, said it assumed companies would “pass on most but not all of their higher tax costs to employees”. But the International Monetary Fund said: “We support the envisaged reduction in the deficit over the medium term, including by sustainably raising revenue.”
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And Ms Reeves said the decision to raise businesses’ National Insurance contributions yesterday was “a difficult one”, adding to BBC: “I’ve tried to protect the smallest businesses from its impact, but the alternative would have been pretending that the pressures on the public finances didn’t exist.”
She added: “I had to make difficult decisions about how to raise the money that is needed. I decided that the right thing to do was to ask businesses and the wealthiest in our country to pay a bit more. They weren’t easy choices. I do recognise that they will have consequences.”
Ms Reeves also told the Beeb today (Thursday Octobrt 31) in the wake of the Budget that “overall the OBR forecasts that household incomes will increase during this parliament, that is a world away from the last parliament – which was the worst parliament ever for living standards”.