UK employers tell Reeves to make 'hard choices' on budget

By William Schomberg and Alistair Smout

LONDON (Reuters) -The head of a British employers group urged finance minister Rachel Reeves on Monday to make "hard choices" in this week's budget and accused her of ignoring business on issues such as a plan to give workers more rights.

The chief executive of the Confederation of British Industry also called on Reeves to announce in her budget speech on Wednesday one or two broad tax increases, rather than "death by a thousand taxes" which could hurt the economy.

"If growth is your priority, prove it – make hard choices for it," Rain Newton-Smith said at the CBI's annual conference.

"All short-term politics leads to is long-term decline ... and this country cannot afford another decade of stagnation."

ECONOMY STUCK IN RUT 

Britain's economy has been largely stuck in a rut of slow growth since the 2007-08 financial crisis, something Reeves and Prime Minister Keir Starmer promised to end when the Labour Party returned to power after 14 years in 2024.

Reeves told last year's CBI conference that there would be no repeat of her first budget, which raised taxes especially for employers via higher social security contributions.

However, she looks set to raise taxes again by tens of billions of pounds to stay on track to meet her borrowing targets, hoping to avoid a bond market selloff while also increasing welfare spending.

Reeves is no longer expected to break an election promise by raising income tax and will resort instead to increases in a range of other taxes.

Newton-Smith welcomed the government's industrial, trade and infrastructure plans. But she called on Reeves to consult with business on energy costs and changes to employment rights, saying: "Lasting reform takes partnership – not a closed door." 

She said possible changes to pension schemes would make it more costly for employers to hire and that eight in 10 firms said the current version of the government's Employment Rights Bill made it harder for firms to hire people.

"These are not academic issues. They are brakes on growth," she said.

MINISTER CONSULTS ON SCHEME TO CUT ENERGY PRICES 

Business minister Peter Kyle, also addressing the CBI, defended the proposed employment legislation, which aims to give rights on benefits and against unfair dismissal to newly hired workers. He said the plans would be pro-business and pro-worker.

Key details around "day-one" rights and protections for those on so-called "zero-hours" contracts will be finalised through consultation after the bill is passed, he said.

Kyle later told reporters that critics of the bill were assuming worst-case scenarios regarding its impact. "But that is not the reality that I will be driving towards," he said.

Opposition Conservative Party leader Kemi Badenoch said the bill was an "assault on flexible working" and would end opportunities for young people to take on seasonal work.

"This is not a pro-worker bill," Badenoch said. "It is a pro-union, anti-business, anti-growth blueprint."

(Writing by William Schomberg and Alistair Smout; editing by David Holmes and Mark Heinrich)