Rachel Reeves’ tax rises are forcing a third of UK companies to cut staff, according to a brutal warning from a business leader that threatens to overshadow a new trade strategy.

The impact of the increase in national insurance contributions was revealed at the British Chambers of Commerce global annual conference which coincides with publication of the UK government’s trade strategy.

BCC director General Shevaun Haviland warned the Government that if it is serious about growth, then it cannot tax business any further.

“The size and scale of the rise in National Insurance Contributions took businesses by surprise,” she said in a pre-conference briefing note.  

“We were unprepared for the huge burden placed upon us, and it led many of us to rethink our growth plans. As a result, our business confidence measures have fallen to their lowest levels since 2022.  

“For the government to achieve its Growth Mission, people need to stay in work and businesses need to invest. As always, businesses soak it up and move forward, but they feel like they are wading through treacle.” 

Prime Minister Sir Keir Starmer, Andrew Bailey, governor of the Bank of England, and Kemi Badenoch, the Conservative party leader, were among those addressing the event in London.

The PM’s speech immediately drew criticism from Karl Mason, UK Spirits Alliance spokesperson, who accused him of speaking “nonsense” about distillers being concerned about whether they can produce enough to meet demand.

“The Prime Minister’s nonsense narrative turns a blind eye to the very regulatory and tax barriers his own Government continues to impose on the spirits sector,” said Mr Mason.

“The punishing tax burden we face at home makes it virtually impossible to invest in export growth. When 70 % of a bottle of gin is swallowed by tax, small and medium distillers aren’t just struggling to grow – they’re fighting to survive.

“Without reform to our domestic tax regime, talk of trade deals is meaningless. The Government can sign as many agreements as it likes, but they won’t touch the ground unless distillers are given the space to stand on it. Our sector deserves more than empty promises – it deserves a chance to compete.”

The BCC event coincides with the publication of the UK’s first trade strategy since the UK left the EU. It promises greater and quicker access to global markets.

The strategy aims to expand export finance – especially for smaller firms – and aligns trade policy with national priorities like green growth and services.

A new Ricardo Fund, which will tackle complex regulatory issues, shape global standards, and remove obstacles for UK businesses selling abroad.

UK Export Finance’s capacity is expanded by £20 billion to £80bn and a new Small Exports gives smaller firms better access to export protection insurance. It introduces improvements to help overseas buyers finance repeat orders from trusted UK suppliers in a more streamlined way. 

It builds on the EU agreement which promises to cut red tape and improve access to the UK’s biggest trading partner. It means Scottish salmon farmers can sell their fish more easily to the EU, Welsh sausages and lamb mince exports will no longer be blocked, and British pets can join their owners on holiday with less headache. 

Prime Minister, Keir Starmer, said “I’ve backed British industry through global headwinds – securing major trade deals with the US, India and the EU that protect jobs and drive growth right across the country.

“Today’s Trade Strategy is a promise to British business: helping firms sell more, grow faster, and compete globally.”

Trade Minister Douglas Alexander said: “This new hard-headed, data driven, and agile approach to trade policy is guided by our pragmatic patriotism. In this changed and challenging world, we will promote what we can and protect what we must to advance the UK’s national interest.

“Through our Trade Strategy, we are supporting our businesses to expand and export with a wider range of trade tools that harness our high-growth industries of the future to deliver this government’s Plan for Change.

“As we target these agreements, we will take every step necessary to safeguard British businesses from the increasingly protectionist mood in much of the world by sharpening our defensive toolkit.”

Jon Holt, group chief executive and UK senior partner at KPMG, said:  “As a high-growth sector, we have long called for a Trade Strategy that enables UK businesses to take advantage of new global opportunities and expand into emerging markets.

“Today we have a clear plan. From removing barriers to overseas markets, to making it easier for our highly skilled people to travel and work across borders, this approach will strengthen our connectivity, boost inward investment and make sure our sector remains globally competitive.

“The strategy’s success will depend on a strong partnership between business and Government.”

Rain Newton-Smith, chief executive of the CBI, said: “Today’s Strategy offers a dynamic vision.

“We now need government and business to work together to turn this ambition into action and ensure that the UK seizes on the opportunities available within the global economy.”