UK business confidence at lowest level since ‘mini-budget’: BCC

UK firms plan to raise prices to cover higher tax payments as business confidence falls to lowest level since market turmoil “mini-budget” crisis. in autumn 2022, according to a survey by the British Chambers of Commerce.

The trade group said sentiment had “declined significantly”. the largest survey since the Labor government debut budget last Octoberwhich included an increase in the amount many employers pay into National Insurance (NI), payroll tax.

The BCC said 63% of businesses cited tax as an issue in the survey, up from 48% in the third quarter. More than half (55%) said they expect prices to rise in the next three months, mainly due to higher labor costs.

The percentage of companies that said they expected to increase turnover in the next twelve months fell to 49% from 56%. Concerns about inflation and interest rates remained approximately stable.

The BCC cites hospitality, manufacturing, construction and healthcare firms as expressing concerns about how they will cover the extra costs and saying they are likely to cut back on investment.

“We understand that (Reeves) has said that she needs to raise taxes to fill her black hole, but what we need to see her do now is tone it down. What are we going to do to stimulate the economy?” Shevon Haviland, head of BCC, told CNBC’s “Squawk Box Europe” on Monday.

“Businesses will have to absorb this tax increase, but we want it to work and they need to act quickly. It’s important that they come up with strategies, an industrial strategy, a trade strategy, an infrastructure plan, later this year, but we need to see action now.”

UK borrowing costs rose after the October 2024 budget, surpassing the level they jumped to after the September 2022 “mini-budget” of Prime Minister Liz Truss announce broad tax cuts without estimating the cost.

However, economists say that The recent rise in bond yields is not equivalent before the surge seen in 2022, as movements were much less dramatic and the microphone—including lower inflation—changed.