Chancellor Rachel Reeves will make a speech to the Eurogroup finance ministers in Brussels today, the first address by a British chancellor to the group since Brexit. She will say she wants a "reset" in relations between the UK and EU to boost economic growth which means "breaking down barriers to trade" and helping "businesses sell in each other's markets". She will also propose building a "mature, business-like relationship" between Britain and the EU, saying: "I know that the last few years have been fractious. Division and chaos defined the last government's approach to Europe. It will not define ours." "I believe that a closer economic relationship between the UK and the EU is not a zero-sum game. It's about improving both our growth prospects," she will add. Labour’s General Election manifesto ruled out re-joining the EU's single market or customs union, but said it wants the UK "deepen ties" with the bloc. BBC business reporter Dearbail Jordan says that while her speech is not expected to result in any changes on this promise, it will signal backing for an agreement on food and farm exports, and a veterinary agreement. It is also noted that closer alignment to European food standards could also “complicate any attempt by the UK to forge closer relations with the US on Donald Trump's re-entry into the White House in January,” a view echoed by shadow business secretary Andrew Griffith, who urged Reeves to "jump on a plane to the US and talk to [President-elect] Trump about getting a US-UK trade deal done, not trying to take Britain backwards into the slow growth EU."

Hiring has gone into “accelerated decline,” according to a new survey by the Recruitment & Employment Confederation (REC) and KPMG, falling last month at its sharpest rate since August 2020, when the UK was facing national covid lockdowns. REC CEO Neil Carberry said: “It should be a surprise to no one that firms took the time to re-assess their hiring needs in November after a tough Budget for employers. The drop in vacancies was led by private sector permanent roles, and slower permanent recruitment billings across the month also reflected this trend. The real question now is whether businesses will return to the market as they go into next year with greater certainty about the path ahead.” Chancellor Rachel Reeves announced that the rate of employer National Insurance contributions (NICs) will rise from 13.8% to 15% next year, while the earnings threshold at which staff incur the tax, paid by employers, will fall from £9,100 to £5,000.

Domino’s Pizza Group says the changes to employers’ NICs and the increase in the national minimum wage will cost it an extra £3m a year from 2024-25 onwards.

Sick pay: The REC is also warning that sick staff risk losing their jobs under Angela Rayner’s Employment Rights Bill. Under the Government’s plans, workers will be able to claim sick pay from the first day of their illness, instead of the fourth, and more staff will be eligible for statutory sick pay (SSP). Currently workers must earn at least £123 per week to qualify for sick pay but that threshold is to be abolished. Shazia Ejaz said the burden of these extra costs risk forcing employers to let staff go if they fall ill for long periods or repeatedly. She said: “Small businesses, which make up a significant portion of the market, would bear a disproportionate cost burden, with 60% of new statutory sick pay (SSP) costs falling on them. “We urge the Government to set the rate of SSP at a level that encourages employers to retain staff, rather than having to move swiftly to capability-based dismissal.” “A balance between worker support and business sustainability is necessary,” she added, especially given that the changes to sick pay come on top of the employers’ NICs rise and the increased minimum wage.

Business optimism: Another piece of research showing confidence among business leaders is plummeting has been released this morning. BDO’s latest business trends survey, which collects and regroups data from the UK’s main business surveys, showed optimism fell in November at its fastest pace in over three years following October’s Budget, and to its lowest level since January 2023. The optimism index dropped 5.8 points to 93.49 in November, the largest monthly fall since August 2021. “The drop in business confidence this month is not a surprise given the significant challenges they continue to face,” Kaley Crossthwaite, a partner at BDO said. Meanwhile, BDO’s output index, also slumped, to its lowest level since October 2023, falling into contractionary territory for the first time this year. In contrast to the first half of the year, when the UK was among the fastest growing G20 economies, the economy grew just 0.1% in the third quarter, down from 0.5% in the quarter before.

OakNorth co-founder and CEO Rishi Khosla has argued in an interview with City AM that “wealth creators” are fleeing the UK because of the Chancellor’s tax hikes. Khosla, whose start-up bank has lent more than £10bn to businesses since launching in 2015, told the newspaper that “even when you have a balanced view, it’s hard to see how” Labour has delivered on its promise to boost economic growth. “When you engage with the current government… they seem to understand very clearly that growth is the way to take the UK where it needs to go,” he said. “But the action doesn’t necessarily match the narrative.” It is “disappointing” not to see a greater emphasis on growth in the Budget, he continued. “Doing that along with doing things which are very pro-growth, which are very pro-entrepreneurship, which are very pro-innovation would have been good,” he argued. “And that was totally, in our view, missing.”

Iceland CEO Richard Walker, however, says companies should stop “wallowing” and “complaining” about the Chancellor’s Budget tax raid. “This isn’t a time for businesses to wallow… The Government isn’t going to change its mind. It was a tough Budget, but we adapt,” he told The Telegraph, adding he was “fairly comfortable and we can mitigate and manage” the changes. Walker used to be a major donor to the Conservative Party but switched his allegiance to Labour before the General Election.

Small businesses, meanwhile, are struggling to match growth with consumer demand, and a quarter are worried they do not have the strength to weather financial shocks, research by HSBC suggests. Over two-thirds of business owners said they could not grow their business enough to meet customer demand for goods and services in 2024, and expect the problem to persist through 2025. HSBC surveyed some 1,000 business owners, all with less than 50 staff. More than half said they faced challenges this year from the rising costs of running their business, while 22% struggled under higher interest rates. Nearly a quarter of SMEs said they do not have the resilience to survive financial shocks, with just over 50% having less than £50,000 in the bank. Around 28% said they had no cash reserves at all.

Harland & Wolff, the Belfast-based shipbuilder which built the Titanic and now employs over 1,000 people, is close to being salvaged from administration by Spain's Navantia in a government-backed rescue that could be formally agreed within days, Sky News said on Friday.

The Observer: It was confirmed on Friday that a sale of The Observer to Tortoise Media has been agreed in principle. The deal includes current owner, The Scott Trust, taking a stake in Tortoise for an undisclosed sum, and getting a seat on both the editorial and commercial boards to "protect the Observer's future, championing the voice of liberal values and investing in exceptional journalism while building its digital offering", it said. In a statement, James Harding, Tortoise editor and the former Times editor who co-founded Tortoise in 2018, said: "We are honoured and excited at the prospect of working together to renew The Observer, a name that represents the best of liberal, pioneering journalism. We promise its readers we will do all we can to live up to its history as a defender of human dignity and to give it a new lease of life as a powerful, progressive voice in the world."

Omnicom and Interpublic, the second- and fourth-largest advertising businesses in the world by revenues, are in talks to merge, the Wall Street Journal reports. If a deal goes ahead, the two US businesses would become larger than the FTSE 100’s WPP, which is currently the world’s largest ad agency, and a title it has held since 2008. Omnicom has more than 75,000 staff and Interpublic has in excess 57,000 globally.

Sky News’ Business Live presenter Ian King has quit the show. He will leave early next year after 10 years, but has “agreed to contribute analysis and reporting” to Sky News’ website over the coming months ahead of his departure, the broadcaster said.

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