United Kingdom: More than half of UK companies have planned to raise prices in the next three months due to escalating costs and taxes, as revealed by the British Chambers of Commerce (BCC). According to a survey of nearly 5,000 firms, business confidence has dropped to its lowest point in two years, with nearly two-thirds of respondents expressing concerns about the rise in national insurance contributions (NICs) set to take effect in April.
The BCC’s findings highlight that 63 percent of businesses are worried about the impact of higher taxes, the highest level of concern recorded since 2017. The national insurance hike, which will increase from 13.8 percent to 15 percent, coupled with the increase in the National Living Wage from $14.26 (£11.44) to $15.22 (£12.21), is putting considerable strain on smaller enterprises.
Kevin McNamee, CEO of Denroy Group, a manufacturing company based in Belfast, described the changes as “shockingly significant,” with the combined impact of the NIC rise and wage increase expected to cost the company hundreds of thousands of pounds. McNamee suggested that price hikes would likely be required to offset these added expenses, although he emphasised the company’s focus on boosting productivity and limiting job growth as a means of coping with the rising costs.
On the other hand, Dame Irene Hays, director of Hays Travel, noted that while the sector faces cost pressures, her company has managed to weather changes in costs over the years. Dame Irene Hays reported a 22 percent increase in bookings, indicating that some sectors, such as travel, are still seeing growth despite the challenging economic landscape.
The latest official data shows the UK economy had zero growth between July and September, with contraction in October. This follows disappointing growth figures released just before Christmas, causing concern for the Labour government, which has made economic growth a key priority. However, a separate KPMG report forecasts the economy will grow by 1.7 percent in 2025, up from 0.8 percent in 2024, as consumers are expected to increase spending with stronger pay growth and lower interest rates.
Despite this forecast, KPMG cautions that the rebound in growth may come at the cost of higher and more persistent inflation, as businesses pass on the burden of tax hikes to consumers. The BCC’s survey reveals that 55 percent of firms expect to raise prices in the coming months, a sharp increase from 39 percent in the previous quarter, further exacerbating inflation concerns.
The Chancellor of the Exchequer, Rachel Reeves, defended the Budget, claiming it would provide stability for businesses and that more than half of employers would either see a reduction or no change in their NICs. However, the BCC’s Shevaun Haviland warned that the “worrying reverberations” of the Budget were evident in the survey, with businesses cutting back on investment and facing the difficult decision of raising prices to cope with mounting financial pressures.
As UK businesses brace for higher costs and taxes, the road ahead remains uncertain, with many firms struggling to balance profitability with the impact of rising living costs for consumers.
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