The Budget hike to employers’ national insurance is ‘exacerbating an already tepid demand environment’, the CBI warned.

Businesses have issued a stark warning to Rachel Reeves that the economy is “headed for the worst of all worlds” with activity expected to fall sharply in the first three months of 2025.

A major survey by the Confederation of British Industry (CBI) found firms expected to reduce both output and hiring.

The Chancellor’s hike to employers’ national insurance, set to rake in around £25 billion a year, was highlighted as one of the reasons for the gloomy outlook.

Alpesh Paleja, the CBI’s interim deputy chief economist, said: “There is little festive cheer in our latest surveys, which suggest that the economy is headed for the worst of all worlds – firms expect to reduce both output and hiring, and price growth expectations are getting........

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