{"id":10083,"date":"2025-01-05T22:49:08","date_gmt":"2025-01-05T22:49:08","guid":{"rendered":"https:\/\/financialrush.com\/?p=10083"},"modified":"2025-01-05T22:49:08","modified_gmt":"2025-01-05T22:49:08","slug":"uk-businesses-plan-price-increases-as-budget-drives-up-costs","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=10083","title":{"rendered":"UK businesses plan price increases as Budget drives up costs"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=a291bc1f-b288-486e-8301-8464bfe20fa5\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>The number of businesses planning to raise prices in the coming months has jumped sharply as increases in the UK Budget in tax and wage costs caused confidence to \u201cslump\u201d, the British Chambers of Commerce has warned.\u00a0<\/p>\n<p>About 55 per cent of companies said they were planning to increase prices in the coming three months, up from 39 per cent in the third quarter, the lobby group\u2019s survey of almost 5,000 businesses found.\u00a0<\/p>\n<p>The expected price rises will fuel concerns that <a href=\"https:\/\/www.ft.com\/uk-autumn-budget-2024\" data-trackable=\"link\">Budget<\/a> measures will underpin the UK\u2019s resilient inflation.<\/p>\n<p>Concerns over tax levels also hit their highest level since 2017, the BCC found, following\u00a0chancellor Rachel Reeves\u2019 decision to lift employers\u2019 national insurance contributions by \u00a325bn in the October Budget.<\/p>\n<p>\u201cBusinesses\u2019 confidence has slumped in a pressure cooker of rising costs and taxes,\u201d said Shevaun Haviland, director-general of the BCC. \u201cFirms of all shapes and sizes are telling us the national insurance hike is particularly damaging.\u201d\u00a0<\/p>\n<p>The government has come under <a href=\"https:\/\/www.ft.com\/content\/8a7e68da-dfd9-4587-9739-f1dd43435fa8\" data-trackable=\"link\">heavy fire<\/a> from business since the Budget, as bosses bemoan higher payments for employers\u2019 national insurance, as well as increases in the national living wage. Subdued confidence has coincided with weak GDP readings, as the Bank of England <a href=\"https:\/\/www.ft.com\/content\/201b1486-1509-4b25-8284-13024fe80e9a\" data-trackable=\"link\">estimates<\/a> the economy failed to grow in the final quarter of 2024 despite a strong start to the year.\u00a0<\/p>\n<p>The proportion of companies planning to increase prices was equal to levels last seen at the beginning of 2023, when official inflation was still more than 10 per cent.<\/p>\n<p>Rising labour costs were the biggest reason given by companies planning to increase prices, with 75 per cent of respondents raising the issue, up from 66 per cent in the third quarter. The issue was most significant for the hospitality sector, as well as transport and logistics, it found.\u00a0<\/p>\n<p>About 63 per cent of businesses said that tax, including national insurance, was a concern in the wake of the Budget, the highest level since 2017. Confidence, meanwhile, has slipped to its lowest level since the aftermath of former prime minister Liz Truss\u2019s mini-Budget in autumn 2022.\u00a0<\/p>\n<p>Just 49 per cent of respondents expect sales to increase over the next 12 months, down from 56 per cent in the third quarter, with confidence lowest in retail and hospitality. Nearly a quarter of companies say they have cut back investment plans, up from 18 per cent in the third quarter, although 56 per cent say their plans are unchanged. <\/p>\n<p>The Bank of England opted to keep borrowing costs steady at 4.75 per cent in its final meeting of 2024, as the central bank continued to monitor the impact of the Budget on inflation prospects. The majority of rate-setters expressed concern that recent increases in wages and prices had \u201cadded to the risk of inflation persistence\u201d.<\/p>\n<p>The BoE warned of \u201csignificant uncertainty around how the economy might respond to higher overall costs of employment\u201d as it warned that \u201cmost indicators of UK near-term activity have declined\u201d.<\/p>\n<p>The meeting followed data that showed <a href=\"https:\/\/www.ft.com\/content\/06d172a6-5583-49f1-a2a3-76fb65091b4d\" data-trackable=\"link\">UK inflation rose to 2.6 per cent<\/a> in November, from 2.3 per cent in October.<\/p>\n<p>The BCC survey was conducted between November 11 and December 9, collecting data from more than 4,800 businesses, more than 90 per cent of which were small or medium-sized enterprises.\u00a0<\/p>\n<p>\u201cFaced with rising costs, our survey paints a difficult picture and shows businesses are having to make some very difficult decisions,\u201d said David Bharier, head of research at the BCC.\u00a0<\/p>\n<p>\u201cMany tell us they expect to push up prices and cut back on investment and we expect this to lead to a low to no-growth economic climate.\u201d<\/p>\n<p>The Treasury said: \u201cWe delivered a once-in-a-parliament Budget to wipe the slate clean and deliver the stability businesses so desperately need.\u201d<\/p>\n<p>It added: \u201cThis is just the start of our Plan for Change, which will unlock investment, get Britain building via planning reform, and employ a modern Industrial Strategy to deliver the certainty and stability businesses need to invest in the UK\u2019s growing and high-potential sectors.\u201d <\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.ft.com\/content\/a291bc1f-b288-486e-8301-8464bfe20fa5\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this&hellip;\n","protected":false},"author":6,"featured_media":10084,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-10083","post","type-post","status-publish","format-standard","has-post-thumbnail","category-us","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/10083","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10083"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/10083\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/10084"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10083"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10083"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10083"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}