According to the British Chambers of Commerce, more than half of employers in the private sector plan to increase prices to offset tax increases.
The BCC’s survey found that business confidence has dropped to the same level as shortly after former Prime Minister Liz Truss Mini-Budget in autumn 2022.
The companies are worried about the cost of increased employer national insurance contributions, a reduction in the threshold for which they will be paid and an increase in the national minimum wage. All this was announced in Rachel Reeves ‘s first budget in her role as Labour chancellor. Changes will be implemented in April 2025.
The BCC reported that 55% were planning price increases in response to tax increases, which would put upward pressure on the inflation rate.
Shevaun Haviland, director general of BCC, said that the worrying reverberations from the budget were evident in our survey results. The confidence of businesses has plummeted under the pressure of increasing costs and taxes.
“Firms all sizes tell us that the increase in national insurance is especially damaging. Businesses have already cut back on investments and are predicting that they will need to increase prices in the next few months.
The government has a right to develop long-term strategies for industry, infrastructure, and trade. These plans will not help struggling businesses.
The current plans are likely to increase costs for firms.
A separate survey conducted by the Federation of Small Businesses found that, in relation to the Employment Rights Bill and the concerns over implementing the Bill’s changes, almost a third of the small businesses have plans to reduce their headcounts this year.
A Treasury spokesperson stated: “We delivered an once-in-a-parliamentary budget to wipe the slate and provide the stability that businesses so desperately require.
“We are creating conditions for economic growth by investing and reforming. We have brought back financial and political stability and created pension megafunds.
“This is only the beginning of our Plan for Change, which will unlock investments, get Britain built via planning reform and use a modern Industrial Strategy in order to provide the certainty and the stability that businesses need to make investment decisions for the UK’s high-potential and growing sectors. All parts of the UK will benefit from this.
