UK business confidence hammered by budget tax changes, says BCC
Proposed tax changes in the Autumn Budget have pushed business confidence to its lowest level in more than two years, according to the British Chambers of Commerce, with more than half of firms expecting prices to rise in the first quarter of 2025.
According to the BCC's fourth-quarter survey published late on Sunday, 63% of UK businesses say taxation is now a concern following the changes, up from 48% in the third quarter and the highest level since 2017.
In October, the chancellor announced that, from April 2025, the earnings threshold at which employers start paying national insurance contributions will fall from £9,100 to £5,000, while the rate being paid will rise from 13.8% to 15.0%.
Some 55% of firms now expect prices to go up over the next three months with labour costs the biggest driver, the BCC said. This compares with just 39% in the third quarter.
The BCC's Quarterly Economic Survey, which includes responses from nearly 5,000 businesses between 11 November and 9 December, showed that just 49% of firms expect their turnover to increase over the next 12 months, down from 56% in the third quarter and the lowest figure since the aftermath of the mini budget in late-2022.
Just two fifths of firms expect their profits to increase over the next year, down from 48% in the third quarter.
“The worrying reverberations of the Budget are clear to see in our survey data. Businesses confidence has slumped in a pressure cooker of rising costs and taxes," said Shevaun Haviland, director general of the BCC.
“Firms of all shapes and sizes are telling us the national insurance hike is particularly damaging. Businesses are already cutting back on investment and say they will have to put up prices in the coming months."