The UK economy unexpectedly contracted in October, marking two consecutive months of negative growth for the first time since the pandemic, according to new ONS figures.
Gross domestic product (GDP) fell by 0.1% in October, with the Office for National Statistics (ONS) linking the contraction to weakened consumer confidence and uncertainty surrounding the Chancellor Rachel Reeves’s Autumn Budget.
Rachel Watkyn OBE, founder of the Tiny Box Company, has warned that the Budget’s impact on small and medium-sized businesses is already being felt.
Ms Watkyn, 53, said her online e-commerce packaging business has faced significant challenges, with the Budget intensifying existing financial pressures.
She told Express.co.uk: “The Autumn Budget affected our operations up to two months before it was announced. The scaremongering of a harsh Budget seemed to have stopped discretionary spending overnight.”
For Tiny Box Company, these challenges have been further compounded by the announced changes to National Insurance (NI) contributions and minimum wage increases.
In her Budget, Ms Reeves confirmed that from April 2025, NI contributions will rise to 15%, while the earnings threshold will drop to £5,000 annually. Retailers estimate these changes will add £2.33billion to costs, in addition to a £2.73billion increase from minimum wage adjustments.
Ms Watkyns said: “Our business is a barometer for the health of small businesses. As soon as the Budget was announced, we saw that small and medium-sized businesses with more than four employees were monumentally concerned.
“Particularly within retail, where margins are low, the Budget effectively gives nearly a 20% pay rise to the under 21s when you add the employer NI changes.”
She added: “The changes in NI and minimum wage will cost our business over £100,000 because increasing those on lower wages ripples throughout the organisation. While the Government says it’s enforcing a 6.7% pay increase, the effective rise, including NI, is closer to 9%.”
Ms Watkyn urged the Government to reconsider recent measures. She said: “We would like to see a reversal on the 35% business rates in the last year and some support on the minimum wage increase due to it having already risen by 37% since the 21/22 budget.
“We’d also like to see some more support in exports due to the General Product Saftey Regulations (GPSR), which is now making it significantly harder to trade with Europe and Northern Ireland.”
Express.co.uk has contacted the Treasury for comment.
