The results of a survey by the British Chambers of Commerce showed that companies in the United Kingdom are currently planning to raise prices to cover higher tax payouts as business confidence has fallen to its lowest level since the fall of 2022 when the market was faced with a shock factor such as a mini-budget.
The mentioned poll was the largest since the debut of the budget of the UK Labor government in October. It is worth noting that the mentioned budget provides for a hike in the amount many employers pay out in National Insurance (NI), a tax on earnings.
Data from the British Chambers of Commerce shows that 63% of businesses cited taxes as a cause for concern in the survey. It is worth noting that in the third quarter of 2024, the corresponding figure was recorded at 48%. Also, 55% of businesses expect prices to rise in the next three months. The survey participants named higher labor costs as the main reason for the corresponding dynamic.
The share of companies expecting an increase in turnover in the next 12 months was 49%. In the third quarter of 2024, the corresponding figure was recorded at 56%.
Also, many companies from different areas of activity, including hospitality, manufacturing, construction, and healthcare, are concerned about how they will cover the additional costs. Moreover, these firms are likely to scale back investments.
The Labor Party, which took office in July, argues that the tax increase was necessary to plug a major shortfall in public finances left by the previous administration.
It is worth noting that the economic system of the United Kingdom is already in a condition of stagnation. In the third quarter of 2024, the country’s gross domestic product (GDP) of the country did not show any growth.
As we have reported earlier, UK Inflation Demonstrates Growth.
