UK Businesses Set to Raise Prices as Budget Pressures Mount and Confidence Plummets

British businesses are bracing for significant price increases in the forthcoming months as the recent Budget’s tax and wage cost hikes have triggered a sharp decline in business confidence, according to the British Chambers of Commerce (BCC).

The latest BCC survey, encompassing nearly 5,000 businesses, reveals that 55 per cent of companies intend to raise prices within the next quarter, marking a substantial increase from 39 per cent in the previous period. These projected price rises are likely to sustain the UK’s persistent inflation challenges.

Tax-related apprehensions have reached their highest point since 2017, following Chancellor Rachel Reeves’ Budget decision to implement a £25 billion increase in employers’ national insurance contributions. Shevaun Haviland, director-general of the BCC, emphasised that businesses across all sectors have identified the national insurance increase as particularly detrimental to their operations.

Labour costs emerged as the primary driver behind planned price increases, with 75 per cent of respondents citing this concern, up from 66 per cent in the third quarter. The hospitality sector, alongside transport and logistics, reported the most significant impact from these rising costs.

Business confidence has deteriorated to its lowest level since the aftermath of Liz Truss’s mini-Budget in autumn 2022. A mere 49 per cent of businesses anticipate sales growth over the next year, down from 56 per cent in the previous quarter, with retail and hospitality sectors displaying the least optimism.

The Treasury has responded to these concerns, stating that the recent Budget aims to provide the stability businesses require. They emphasised their commitment to implementing a Plan for Change, designed to boost investment and deliver certainty across high-potential sectors of the UK economy.

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