(qlmbusinessnews.com . Tues 7th Jan, 2025) London, UK —

BCC Survey: UK Firms Grapple with Costs, Plan Price Rises for 2025

More than half of UK businesses are planning to raise their prices in the coming months, as rising costs, increased taxes, and wage pressures create what the British Chambers of Commerce (BCC) has described as a “pressure cooker” environment.

A survey by the BCC of nearly 5,000 companies revealed that business confidence has dropped to its lowest point in two years, with 63% of respondents expressing concerns over tax increases following the recent Budget. From April, employer national insurance contributions (NICs) will rise from 13.8% to 15%, while the National Living Wage will increase from £11.44 to £12.21 per hour.

Shevaun Haviland, Director General of the BCC, said businesses are left with difficult choices. “You can raise prices, reduce margins, or cut staff. It’s an incredibly tough environment.”

The survey highlighted that 55% of firms expect to raise prices in the next three months, up sharply from 39% in the previous quarter. This move risks fuelling inflation, which, while significantly lower than its peak in 2022, has risen in recent months.

Kevin McNamee, CEO of Denroy Group in Northern Ireland, said the changes could cost his company “hundreds of thousands of pounds,” leading to inevitable price increases and a focus on improving productivity while limiting hiring.

Despite this, some sectors remain resilient. Dame Irene Hays of Hays Travel reported a 22% increase in bookings, saying the company has weathered similar challenges during its 45-year history.

UK Businesses to Raise Prices Amid Cost and Tax Increases

The government has defended its fiscal measures, with a Treasury spokesperson stating that the Budget was designed to restore stability and ensure long-term growth. More than half of employers, they added, will see no change or a reduction in NICs.

However, business groups warn that tax hikes, coupled with subdued demand, could hinder economic recovery. Official figures show the UK economy stagnated in the third quarter of 2024 and contracted in October.

Looking ahead, KPMG forecasts a 1.7% growth in the UK economy for 2025, compared with 0.8% last year, driven by stronger wages and lower interest rates. However, it cautioned that higher growth might lead to more persistent inflation as businesses pass on increased costs to consumers.

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