Rising funding costs, rising gas prices and a record-breaking tax raid on UK businesses bode ill for the UK economy in 2025, according to economist Andrew Sentance, a former member of the Bank of England’s Monetary Policy Committee (MPC).

UK borrowing costs - measured by the yield on ten-year government bonds - have reached the highest levels since the financial crisis, surpassing levels achieved under the ill-fated Liz Truss government. The moves highlight investor anxieties towards the UK, which desperately needs stronger growth to boost the government’s tax revenues.

However, growth will prove elusive, says Sentence, adding: “An economic crisis in the UK is looming. Lack of confidence in financial markets is a big issue for Rachel Reeves. But she shows no interest in the issue and ploughs on regardless.”

The calls come as businesses ready themselves for a record-breaking tax raid in 2025 as the measures announced by Reeves in the October budget are enacted. Businesses face the biggest year-on-year increase in the tax burden since the minimum wage was first introduced in 1999.

Surging cost of jobs
The cost of employing a full-time worker on minimum wage will rise by £2,367 this year to more than £24,800 per person, with more than £5,000 of that going to the Treasury, according to a new analysis by the Centre for Policy Studies (CPS).