British companies plan to raise prices to cover higher tax bills as business confidence falls to its lowest level since the market-shaking ‘mini-budget’ crisis in autumn 2022, according to a survey by the British Chambers of Commerce. It is said that they are doing so.
The industry group said sentiment had fallen “significantly” in its biggest poll since the Labor government came to power in October last year, which included an increase in National Insurance (NI) payments that many employers levy on their income. said.
According to BCC, 63% of businesses in the survey cited taxes as a concern, up from 48% in the third quarter. More than half (55%) said they expected prices to rise over the next three months, primarily due to higher labor costs.
The percentage of companies saying they expect sales to increase over the next 12 months fell from 56% to 49%. Concerns about inflation and interest rates have remained largely stable.
The BCC cited hospitality, manufacturing, construction and healthcare companies expressing concerns about how they would cover the additional costs and saying they were likely to scale back investments.
“We recognize that (Reeves) said she had to raise taxes to fill her black hole, but what she needs to do now is ease it into the economy. What are we going to do to promote this?” BCC Director Shebaun Haviland said on CNBC’s “Squawk Box Europe” on Monday.
“Businesses will have to pay for this tax increase, but what we want her to do is act, and businesses need to act quickly. Developing strategies such as industrial strategy, trade strategy, infrastructure planning, etc. It’s important that we do this later this year, but we need to act now. ”
Britain’s borrowing costs have risen since the October 2024 budget, surpassing the level they spiked after the September 2022 “mini-budget” when then chancellor Liz Truss announced large, cost-free tax cuts.
However, economists say the recent rise in bond yields is not comparable to the spike seen in 2022, the move is far less dramatic, and the macro backdrop has also changed, including cooling inflation. are.
