Half of employers could raise prices if cost of hiring goes up in Budget
Britons may need to brace for fewer jobs or higher prices once again next year after a new survey of business owners suggested that almost half (49 per cent) of business owners would consider increasing them if employment costs were increased again in the budget.
Most firms have been hit at least once this year, and many from different angles, following changes to the minimum wage, National Insurance contributions, rules on packaging costs, the end of business rates for some industries and the prospect of reduced overseas sales due to tariffs.
These cost pressures, along with widespread uncertainty about what will happen in this month’s Budget, have led some firms to delay hiring additional workers, even as interest rates have gradually fallen throughout the year.
Now Employment Hero’s research and One Poll’s survey of 1,000 business leaders suggest pricing and employment plans will be in the firing line if Rachel Reeves disappoints further.
Another 49 percent said they would consider a raise, while a third (33 percent) said they would delay hiring if the cost of employing people rose again. Almost one in four (24 percent) said they would consider making a layoff from their current position.
More than half (59 per cent) of business owners said the Budget decisions did not take into account the needs of small businesses, while a whopping 86 per cent said they were “concerned” about what the Budget would mean for the company in the long term.
The British Chambers of Commerce (BCC) has repeatedly warned the government against further increases in business taxes, saying companies cannot continue to shoulder more burdens to fix the economy.
While Ms. Reeves voiced the need for economic growth, experts argued that her policies of taxes hindered growth.
Rising prices are contributing to rising inflation, which has been a major problem in the UK over the last few years. While the rate was lower than expected at 3.8 per cent in September, it remains well above the 2 per cent target and an inflationary Budget could compound the damage further.
While the numbers on potential price increases are alarming, other data may point to a limiting effect on what will actually happen.
Business insurance provider Simply Business released a report on Monday showing that fewer small firms that planned to raise their prices in the spring actually did so; less than half compared to 74 percent who plan to do so.
But this means covering the extra costs means reduced profitability, putting more pressure on those who would normally provide work.
“The Chancellor has the opportunity to tackle these challenges by reducing the cost of doing business and providing a platform for growth. Small business owners are calling on the government to cut Corporation Tax for small profits (15 per cent), reverse or reduce employer NI increases (14 per cent) and provide more support for energy bills (14 per cent),” said Julie Fisher, UK CEO of Simply Business.
Kevin Fitzgerald, UK chief executive of Employment Hero, added: “When you tax small businesses, you tax everyone. This creates a domino effect – higher costs lead to higher prices, fewer jobs and less money in people’s pockets. Small businesses use the majority of our workforce. You make life harder for them and you make it harder for Britain to grow.”
“The Autumn Budget is an opportunity to learn from past mistakes.”
