British businesses are considering raising prices to cover higher taxes as business confidence has fallen to its lowest level since market turmoil. “Mini-budget” crisis from autumn 2022, according to a survey by the British Chambers of Commerce.
The trade group said sentiment had “declined significantly” in its report. the biggest poll since the Labor government first budget last Octoberwhich included an increase in the amount many employers pay in National Insurance (NI), an income tax.
The BCC said 63% of businesses cited tax as a concern in the survey, 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 percentage of businesses saying they expect revenue to increase over the next twelve months fell to 49% from 56%. Concerns regarding inflation And interest rate remained approximately stable.
The BCC cited companies in the hospitality, manufacturing, construction and healthcare sectors expressing concerns about how they would cover the extra costs and saying they would likely reduce investments.
“We recognize what (Reeves) said, that she needs to raise 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 stimulate the economy? Shevaun Haviland, head of the BCC, told CNBC’s “Squawk Box Europe” on Monday.
“Companies are going to have to assume this tax increase, but what we want them to do is act, and they must act quickly. It is important that they put in place strategies, an industrial strategy, a business strategy, an infrastructure plan, for later this year, but we must act now.”
UK borrowing costs soared after the October 2024 Budget, surpassing levels reached after the September 2022 “mini-budget”, which saw then-Prime Minister Liz Truss announce radical, cost-free tax cuts.
However, economists claim that the recent rise in bond yields is not equivalent to the increase observed in 2022, as movements have been significantly less dramatic and the macroeconomic context – including a cooling of inflation – has changed.