Staff Reporter

More than half of UK companies intend to raise prices within the next three months, citing a “pressure cooker of rising costs and taxes.”

This alarming trend emerges from a recent survey conducted by the British Chambers of Commerce (BCC), which included nearly 5,000 firms and revealed a significant decline in business confidence—now at its lowest point in two years.

The survey indicated that nearly two-thirds of respondents expressed concern over tax implications following the recent Budget announcement, which included an increase in national insurance contributions (NICs) for businesses starting in April.

As firms consider these price increases, there are growing fears that such actions could exacerbate inflation during a period when many consumers are already grappling with the burden of rising living costs.

Following the recent Budget, the British Chambers of Commerce conducted a survey revealing that 55% of firms anticipate raising their prices in the next three months, a notable increase from the previous figure of 39%.

“You’ve got to think about putting up prices… or you’ve got to take that hit in your margin, which means you have less money to invest in the future, or you’ve got to look at your recruitment and staff costs. So it’s really, really tough,”said Shevaun Haviland, the BCC’s director general.

Amid subdued demand and rising employment costs, many service providers are opting to reduce hiring and postpone filling vacant positions. Tim Moore, economics director at S&P Global Market Intelligence, noted, “Nearly one in four respondents reported an overall decline in their payroll numbers.”

A recent report from KPMG anticipates an acceleration in economic growth this year, projecting a rise of 1.7%, up from a modest 0.8% in 2024.

The firm expects consumers to “ramp up the pace of spending,” driven by stronger wage growth and declining interest rates, which are expected to bolster household incomes.

However, KPMG cautioned that this rebound in growth may come at the expense of higher and more persistent inflation, as businesses are likely to pass on the costs associated with recent tax increases.

The British Chambers of Commerce gathered data from over 4,800 businesses across the UK between November 11 and December 9. The findings revealed that 91% of respondents were classified as small and medium-sized enterprises, each employing fewer than 250 people.

The survey indicated that 63% of firms expressed concern about tax, marking the highest level of anxiety since the BCC began tracking this data in 2017.

Confidence among businesses has notably declined, with only 49% of firms anticipating an increase in sales over the coming year. This figure represents the lowest level of optimism since the fallout from the mini-budget in late 2022.