British companies are planning to raise prices to cover higher tax payments as business confidence falls to its lowest level since the market-shaking 'mini-budget' crisis of autumn 2022, a survey by the House of Representatives has found. Commerce.
The trade group said sentiment had 'fallen significantly' in the largest poll since the Labor government's debut budget last October, which included a rise in the amount many employers pay out to National Insurance (NI), a tax on income .
According to the BCC, 63% of companies cited taxes as a concern in the survey, up from 48% in the third quarter. More than half (55%) say they expect prices to rise in the next three months, mainly due to higher labor costs.
The percentage of companies that say they expect turnover to increase in the next twelve months fell from 56% to 49%. Concerns about inflation and interest rates remained more or less stable.
The BCC quoted companies from the hospitality, manufacturing, construction and healthcare sectors expressing concerns about how they would cover the additional costs and saying they would likely scale back investments.
'We recognize something [Reeves] said she needs to raise taxes to fill her black hole, but what we need to see her do now is soften that up. What are we going to do to drive the economy?” Shevaun Haviland, head of the BCC, told DailyExpertNews's “Squawk Box Europe” on Monday.
“Businesses will have to absorb this tax increase, but what we want to see is action, and they need to act quickly. It's important that they put strategies in place, industrial strategy, trade strategy, infrastructure plan, for later this year, but we need to see action now.”
UK borrowing costs rose after the October 2024 Budget, exceeding the levels they reached after the September 2022 'mini-budget', in which then Prime Minister Liz Truss announced sweeping, cost-free tax cuts.
However, economists say the recent rise in bond yields is not equivalent to the 2022 rise as the moves have been significantly less dramatic and the macroeconomic backdrop – including a cooling of inflation – has changed.