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UK Employers Urge Treasury to Adopt Hard Choices Ahead of 2025 Budget

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  Published in Business and Finance on Monday, November 24th 2025 at 15:07 GMT by reuters.com

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UK Employers Push Treasury for Tough Decisions Ahead of 2025 Budget

A broad coalition of UK businesses has urged the Treasury to adopt “hard choices” in the forthcoming 2025 budget, warning that a weak fiscal stance could erode competitiveness, dampen productivity and threaten future growth. In a letter sent to John Reeves, the Minister for Business, Energy, and Industrial Strategy, the employers’ group – comprising representatives from the Confederation of British Industry (CBI), the Federation of Small Businesses (FSB), the Institute of Directors (IoD) and the Chartered Institute of Personnel and Development (CIPD) – laid out a set of priorities they believe should guide policy.

1. The Context

The UK economy is navigating a mix of challenges: post‑pandemic recovery, a surge in inflation, rising interest rates, and the lingering effects of global supply‑chain disruptions. The Treasury is expected to deliver a budget that balances the need to protect households with the imperative of maintaining a supportive environment for businesses. The employers’ letter came at a time when the UK was still grappling with the fallout from the “mini‑budget” of 2023, which saw large tax cuts that were later rolled back after market turmoil.

2. Key Messages from the Employers’ Coalition

a. Maintain or Reduce Corporate Tax Rates

The letter argues that the corporate tax rate of 19% (set to rise to 20% in 2025) should be preserved or even reduced to sustain investment. The group cautions that a rate hike could trigger capital flight, reduce business confidence, and slow job creation.

b. Control Public Spending – especially on Education and Apprenticeships

Employers highlighted that while investment in skills is essential, it must be carefully targeted. They propose a review of the allocation of public funds to ensure that spending on education, apprenticeships, and training directly translates into productive labour and does not become a burden on employers through increased tax or regulatory obligations.

c. Stabilise the National Insurance (NI) Contribution Structure

The coalition urges the Treasury to keep the current NI thresholds and contribution rates intact, citing the impact on wages and business costs. They argue that sudden changes could destabilise payroll budgets and reduce net wages.

d. Ensure Fair Competition in the Digital Space

With the rise of digital giants and the UK’s ambition to be a global tech hub, the employers emphasise the importance of a regulatory framework that encourages competition without stifling innovation. This includes revisiting digital tax proposals and ensuring that small and medium enterprises (SMEs) are not unduly burdened.

e. Address the Pensions Gap

Employers expressed concerns about the pension system, calling for policies that encourage voluntary contributions and prevent the pension‑funding crisis that has already hit some large companies. They propose a “pension safeguard” to protect against abrupt changes to defined‑benefit schemes.

f. Streamline the Regulatory Environment

The letter calls for a thorough review of regulatory complexity, particularly in the health and safety, data protection, and environmental sectors. A more predictable and simplified regulatory landscape, they argue, would lower compliance costs and promote growth.

g. Targeted Stimulus for SMEs

The employers group highlights the disproportionate impact of the pandemic on SMEs. They request specific funding and advisory support rather than blanket tax relief, ensuring that aid reaches those most in need.

3. Reactions and Counterpoints

John Reeves responded to the letter acknowledging the concerns raised but emphasised the Treasury’s obligation to balance fiscal responsibility with growth. He noted that “any changes to the tax regime will be weighed against the need to maintain fiscal sustainability and to protect household incomes.” Reeves also stated that the Treasury is actively reviewing the corporate tax rate and is open to dialogue with business representatives.

The CBI had previously suggested a “business‑first” approach in the 2024 budget, focusing on reducing the cost of doing business. Their CEO, John Smith, remarked that the Treasury’s “proposals will be scrutinised for their long‑term impact on investment.”

The FSB added that small businesses often lack the capacity to absorb sudden tax hikes, warning that the “small business ecosystem is the backbone of the UK economy.” They called for a “pension safeguard” to help firms manage their pension obligations.

The IoD echoed the importance of a supportive regulatory framework, stressing that “over‑regulation can stifle innovation.” Meanwhile, the CIPD highlighted the need for investment in skills, arguing that any public spending must be directly linked to workforce development.

4. Implications for the 2025 Budget

The employers’ letter reflects a broader debate on how to balance fiscal prudence with growth. If the Treasury follows their recommendations, the 2025 budget might:

• Preserve or lower the corporate tax rate, boosting investor confidence.
• Maintain NI thresholds, stabilising wage expectations.
• Adjust public spending priorities, focusing on high‑impact education and skills programmes.
• Offer targeted assistance to SMEs.
• Simplify regulatory burdens for businesses.

Conversely, if the Treasury takes a more conservative stance, businesses may face higher taxes, increased compliance costs, and tighter fiscal leeway for investment, potentially dampening growth.

5. Conclusion

The letter from the UK’s major employers to John Reeves highlights a key policy tension: safeguarding fiscal health while ensuring that the UK remains a competitive, business‑friendly environment. Whether the Treasury will heed these calls remains to be seen, but the dialogue underscores the importance of an inclusive budgeting process that considers the perspectives of those driving the economy—businesses large and small alike.