CBI warns Rachel Reeves' tax policies driving unemployment until 2027

The Confederation of British Industry has issued a warning that Chancellor Rachel Reeves' tax policies on employment are causing rising unemployment and will severely limit hiring until at least 2027. According to the business group, the £25 billion increase in National Insurance contributions implemented in April, coupled with a significant rise in the minimum wage, is undermining the government's growth agenda. This challenges the Chancellor's assertion that her tax policies are unrelated to the current 5% unemployment rate—the highest since pandemic lockdowns. The CBI's economic forecast indicates private sector employment will remain stagnant next year due to increased hiring costs from last year's Budget. The organization projects unemployment will persist at 5% throughout next year and into 2027 before slightly declining to 4.8% by year's end. Reeves has defended her policies by citing a 329,000 job increase this year, though tax data shows nearly 180,000 fewer payroll employees since her first Budget. The CBI further warns that upcoming legislation including the Employment Rights Bill and restrictions on salary sacrifice will additionaly increase employment costs. Chief economist Louise Hellem noted that elements of government policy are working at cross purposes, with employment goals being undermined by increased business costs. While government spending has boosted GDP growth projections to 1.4% this year, Hellem characterizes this as short-term stimulus rather than fundamental economic improvement.