British businesses are planning to raise prices to pay higher taxes as business confidence slumps to its lowest level since the “mini-budget” crisis that rocked markets in the autumn of 2022, a survey by the British Chambers of Commerce showed.
The trade group said its market sentiment had declined “significantly” largest opinion poll Since the Labor government’s first budget last October, many employers have increased the amount they pay in National Insurance (NI), a form of income tax.
The BCC said 63% of businesses surveyed cited taxes as a concern, up from 48% in the third quarter. More than half (55%) said they expect prices to rise over the next three months, mainly due to rising labor costs.
The proportion of companies saying they expect turnover to increase over the next 12 months fell from 56% to 49%. Concerns about inflation and interest rates remained broadly stable.
The BCC cited companies in the restaurant, manufacturing, construction and healthcare sectors as expressing concerns about how to bear the additional costs and saying they may scale back investments.
“We recognize what (Reeves) is saying she has to increase taxes to fill her black hole, but what we need to see her do now is mitigate that. What are we going to do to get the economy moving?” BCC director Shevaun Haviland told CNBC’s “Squawk Box Europe” on Monday.
“Businesses will have to bear the burden of raising taxes, but we want to see her act and they need to act quickly. It’s important that they have the appropriate strategies in place, industrial strategies, trade strategies, infrastructure plans, later this year Some time, but we need to act now.
Following the October 2024 budget, UK borrowing costs climbed beyond the levels seen after the September 2022 mini-budget, when then Prime Minister Liz Truss announced sweeping, no-cost tax cuts.
However, economists say the recent rise in bond yields does not equate to a surge in 2022, as the volatility is significantly smaller and the macro backdrop, including cooling inflation, has changed.
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