Britain's businesses are being pushed towards a “tipping point” by rising taxes and costs, the head of the country's main employers' group will warn, in a message that carries directly to insurers and the brokers who cover them. The cost squeeze hits the commercial clients at the centre of the insurance market, and the sector itself pays the same payroll bills as any other employer.
Confederation of British Industry (CBI) chief executive Rain Newton-Smith will use a business dinner speech to tie the government's tax choices to the pressure on firms. CBI research puts total business taxes paid by the private sector at £345 billion in the last financial year.
Employer national insurance contributions (NICs) are now the single biggest source of that bill at £123.1 billion, ahead of corporation tax at £103.1 billion. NIC receipts rose 27.6% year on year, while overall business tax revenue climbed about 12.7%.
The jump followed Chancellor Rachel Reeves' decision to lower the salary threshold and raise the NIC rate in her first Budget. Across her first two Budgets she raised taxes by some £66 billion. Newton-Smith is expected to say the NIC rises and higher minimum wages have not been “free of consequence.”
“You cannot fix the cost-of-living without fixing the cost of doing business. And the cost of doing business is reaching a tipping point,” Newton-Smith will say.
The warning points to risk on two fronts. Cost-strained firms may trim or delay cover and leave themselves underinsured.
Underinsurance is already widespread, with about two-thirds of UK commercial properties insured for less than their rebuild cost, on average only 67% of it. Rebuild costs have risen 3.8% in the year to January 2025, driven by labour, higher employer NICs, and the National Living Wage.
The sector also carries the higher employment costs that Newton-Smith describes.
This exposure is concrete, as frozen income tax and NIC thresholds and a higher minimum wage lift insurers' own staff costs. These costs can feed through into general insurance premiums and underwriting decisions.
The address comes against political uncertainty and an energy price shock tied to the Iran war. The Office for Budget Responsibility is expected to revise up borrowing estimates after missing an earlier forecast by about £65 billion. Analysts have questioned the government's ability to contain energy-driven inflation.
Newton-Smith will also urge MPs to look “outwards not inwards” during Labour's internal disputes and warn that the infighting is hitting investment and confidence. “Business cannot afford a summer of stagnation while the politics play out,” she will say.
