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The number of businesses planning to raise prices in the coming months has risen sharply as confidence is “slumped” by rising tax and wage costs in the UK budget, the British Chamber of Commerce has warned.
About 55 percent of companies said they plan to raise prices in the next three months, up from 39 percent in the third quarter, the lobby group’s survey of nearly 5,000 businesses found.
Expected price increases will fuel that concern Budget The measures will underpin the UK’s resilient inflation.
Concerns about tax levels are also at their highest level since 2017, the BCC found, following Chancellor Rachel Reeves’ decision to lift employers’ National Insurance contributions by £25bn in the October Budget.
BCC Director General Shevan Haviland said, “Rising costs and tax pressures have dampened business confidence.” “Companies of all shapes and sizes are telling us that the increase in National Insurance is particularly harmful.”
came under the government heavy fire from business since the Budget, as bosses bemoan employers paying higher National Insurance payments as well as a rise in the National Living Wage. Low confidence coincided with weak GDP readings, according to the Bank of England guess Despite a strong start to the year, the economy failed to grow in the last quarter of 2024.
The proportion of companies planning to raise prices was similar to levels last seen in early 2023, when official inflation was still above 10 percent.
Rising labor costs were the biggest reason companies planned to raise prices, with 75 percent of respondents citing the issue, up from 66 percent in the third quarter. The problem was most critical for the hospitality sector as well as transport and logistics, it found.
Some 63 per cent of businesses said tax, including National Insurance, was a concern in the wake of the budget, the highest level since 2017. Meanwhile, confidence has fallen to its lowest level since former prime minister Liz Truss became mini. – Autumn Budget 2022.
Just 49 percent of respondents expect sales to increase over the next 12 months, down from 56 percent in the third quarter, with confidence lowest in retail and hospitality. About a quarter of companies said they had scaled back investment plans, up from 18 percent in the third quarter, although 56 percent said their plans were unchanged.
The Bank of England decided to keep borrowing costs steady at 4.75 percent at its final meeting in 2024, as the central bank continues to monitor the impact of the budget on inflation prospects. Most of the rate-setters expressed concern that the recent rise in wages and prices “increased the risk of continued inflation”.
The BoE warned of “significant uncertainty about how the economy might respond to higher aggregate costs of employment” as it warned that “most indicators of UK near-term activity have declined”.
The meeting follows the information shown UK inflation rose to 2.6 percent in November, up from 2.3 percent in October.
The BCC survey was conducted between November 11 and December 9, collecting data from more than 4,800 businesses, more than 90 percent of which were small or medium-sized enterprises.
“Faced with rising costs, our survey paints a stark picture and shows that businesses are having to make some very tough decisions,” said David Barrier, head of research at the BCC.
“Many tell us they expect prices to rise and investment to fall, and we expect this to lead to a low to no-growth economic climate.”
The Treasury said: “We have delivered a one-off budget to Parliament to wipe the slate clean and provide much-needed stability to businesses.”
It added: “This is just the start of our plan for change, which will unlock investment, build Britain through reform plans and employ a modern industrial strategy to provide the certainty and stability needed to invest in the UK’s growing and high-profile businesses. potential sector.”
