Private Sector Firms to Increase Prices as Tax Hikes Loom

By Evans Momodu
2 minute digest


More than half of private sector firms are planning to increase prices to offset the impact of tax hikes announced in Chancellor Rachel Reeves's first budget, according to a survey by the British Chambers of Commerce (BCC).

The BCC revealed that business confidence is at its lowest point since the market turmoil following the Conservatives' mini-budget in autumn 2022. The survey of nearly 5,000 firms showed that concerns over tax are now at their highest level since 2017.

Labour campaigned in the general election on fostering a pro-business environment, but the October 30 budget shocked many.

Businesses were made responsible for the majority of £40 billion in tax increases, with the government arguing the measures were needed to address a public finance deficit inherited from the previous administration and to fund essential public service investments.

However, companies warned that the added financial burden—stemming from measures such as increased employer National Insurance contributions and a higher National Living Wage starting in April—would likely be passed on to consumers. They also cautioned that these changes could negatively affect wage growth, employment, and investment.

The Bank of England, already facing challenges in reducing interest rates amid persistent cost pressures, will be closely monitoring the potential inflationary risks posed by these planned price hikes. According to the BCC survey, 55% of businesses intend to raise their prices in response to the tax increases.
Source: Sky news