National Insurance contribution (NIC) rises announced in the Autumn Budget are the main worry for over two-thirds of firms polled by the British Chambers of Commerce (BCC).
This represents a 15% rise on the levels of that sentiment recorded in the previous three months, whereas concerns about inflation and interest rates among firms polled in the BCC’s Quarterly Economic Survey remain around the same level (47%) as in the final three months of 2024.
The level of worry about taxes from firms is as high as it’s been since the BCC began asking businesses the question in 2017.
Looking ahead to the New Year, less than half of companies that responded to the poll said they expect turnover to rise in the next year, a drop from 56% in the three months before.
Indeed, 15% expect turnover to worsen during 2025.
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The biggest fear among firms continues to be the cost of labour, which is a feeling present in three-quarters of businesses – almost a 10% increase on Q3.
Investment-wise, just a fifth of firms said they made plans to boost their investment plans during the previous three-month period and a quarter (24%) have cut back on investments, a hike from 18% in Q3.
‘Worrying reverberations of the Budget’
Shevaun Haviland, director general of the BCC, said: “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.
“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.
“The Government is rightly coming up with long-term strategies on industry, infrastructure and trade. But those plans won’t help businesses struggling now. Business stands ready to work in partnership to make the proposed Employment Rights legislation work for all, but the current plans will add further costs on firms.”
Haviland added: “To help business, we need to see quick action in three specific areas. Firstly, ministers should accelerate business rate reform to create a system that [incentivises] investment.
“We also need the Government to speed up infrastructure investment, to help SMEs in supply chains across the country. Finally, it’s crucial to support exports, prioritising a better trading deal with the European Union.
“Without urgent Government action to ease the pain on businesses, the challenging economic landscape will get worse before it gets better.”
