British companies plan to raise prices to cover higher taxes as business confidence falls to lowest level since market shocks “mini-budget” crisis. according to a survey conducted by the British Chambers of Commerce in autumn 2022.
The trade group said sentiment had “worsened significantly”. largest survey since the Labor government debut budget in October last yearwhich included an increase in the amount many employers pay into National Insurance (NI), or tax on earnings.
BCC found that 63% of companies in the survey cited taxes as a concern, up from 48% in the third quarter. More than half (55%) said they expected prices to increase in the next three months, mainly due to higher labor costs.
The percentage of companies saying they expect turnover to increase over the next twelve months has fallen to 49% from 56%. Concerns about inflation AND interest rates remained more or less constant.
BCC cited the opinions of companies from the hotel and catering, manufacturing, construction and healthcare industries, which expressed concerns about how to cover additional costs and are likely to limit investments.
“We know what (Reeves) said, that he needs to raise taxes to fill his black hole, but now we need to see it to alleviate this situation. What will we do to stimulate the economy?” Shevaun Haviland, head of BCC, told CNBC's “Squawk Box Europe” on Monday.
“Companies will have to cope with this tax increase, but what we want them to do is act, and they must act quickly. It's important that they implement the strategies, the industrial strategy, the trade strategy, the infrastructure plan, the plan for later this year, but we need to take action now.”
The UK's borrowing costs have risen in the wake of the October 2024 Budget, exceeding the levels that skyrocketed following the adoption of the September 2022 'mini-budget' by then Prime Minister Liz Truss announce radical, free tax cuts.
However, economists say that the recent rise in bond yields is not equivalent to the sharp increase seen in 2022 as movements were much less dramatic and the macro backdrop – including cooling inflation – changed.