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British business confidence has “collapsed” as they face a “pressure cooker of rising costs and taxes”, according to a business group.
The British Chamber of Commerce (BCC) said its survey of more than 4,800 businesses suggested confidence had fallen to its lowest level in two years.
Almost two thirds told the BCC they were worried about taxes following the Budget, which announced an increase in National Insurance Contributions (NICs) paid by businesses from April, and more than half expect prices to increase over the next three months.
A Treasury spokesperson said more than half of employers would see either a reduction or no change to their NI bills.
The strength of the UK economy has been thrust into focus following the release of disappointing growth figures just before Christmas.
The latest official data shows that the economy experienced zero growth between July and September, while it contracted in October.
These figures were seen as a blow to the government which has made reviving the economy its top priority.
Labor has promised to deliver the highest sustained economic growth in the G7 group of the world’s richest countries.
Businesses have already warned that Budget measures such as increasing employer NICs, as well as increasing the National Living Wage, could lead to job losses and price rises.
Kevin McNamee/Denroy Group
Kevin McNamee said businesses were “shocked” by changes to national insurance in the Budget.
Kevin McNamee is managing director of Denroy Group, a plastics products manufacturer based near Belfast which employs 250 people.
He said the combined impact of changes to the minimum wage and national insurance would cost the business “hundreds of thousands of pounds, it’s really significant”.
It was “probably inevitable” that prices of some of their products would rise to try to cover the higher costs, he said.
“The focus now will be on increasing productivity, reducing headcount or certainly not increasing headcount as the business grows and improving that productivity.”
He added that businesses had been “shocked” by the changes to national insurance.
“It’s hard to see how the budget incentivizes businesses to invest to grow, we’ve picked our pockets to some extent here.”
The BCC collected data from more than 4,800 businesses across the UK between November 11 and December 9. According to the report, 91% of companies surveyed were classified as small and medium-sized businesses, with fewer than 250 employees.
The study reveals that 63% of businesses are worried about taxes. This is the highest level since 2017, when the group of companies began recording the data, and up from the previous figure of 48%.
The BCC said confidence had fallen, with 49% of businesses expecting sales to increase over the next year. The business group said this was the lowest level since the end-2022 mini-budget.
More than half – 55% – of companies in the survey said they planned to raise prices in the next three months.
“The worrying implications of the budget are clearly visible in our survey data,” said Shevaun Haviland, director general of the BCC.
“Business confidence has collapsed in a pothole of rising costs and taxes.
“Businesses of all shapes and sizes are telling us that the National Insurance hike is particularly damaging. Businesses are already cutting back on investment and saying they will have to raise prices in the coming months.”
A Treasury spokesperson said: “We have presented a single Budget to wipe the slate clean and provide the stability businesses desperately need.
“We have ensured that more than half of employers see either a reduction or no change to their national insurance bills, and by capping the corporation tax rate at the lowest level in the G7, creating mega pension funds and establishing a National Wealth Fund, we “We are bringing back political and financial stability, creating the conditions for economic growth through investment and reforms.”
The spokesperson added that this was just the start of the government’s plans for change which will “improve the situation for all parts of the country”.
