Labour’s raid on employer National Insurance Contributions (NICs) has driven a sharp rise in firms looking to put up prices, official figures revealed yesterday.
The Office for National Statistics (ONS) said the share of businesses planning to hike prices in the next month is up from 11 per cent to 15 per cent.
And the biggest reason for doing so was the increase in the cost of labour – cited as 39 per cent higher. Several businesses said they would be hit by National Insurance rising, the ONS said.
Squeezed: The Office for National Statistics says more companies are planning to raise their prices as a result of Labour’s raid on employer national insurance contributions
There was also a significant rise in firms that said their main concern looking ahead was taxation, which increased from 10 per cent to 14 per cent.
It is the latest evidence that Rachel Reeves’s £25billion raid on employer NICs is taking a heavy toll on corporate Britain.
The Chancellor has increased the rate from 13.8 per cent to 15 per cent and lowered the threshold for paying it from £9,100 to £5,000.
The ONS figures, compiled following the Budget, come after more than 80 retailers wrote to Reeves this week to warn of job losses, shop closures, lower wages and higher prices.
Research from wealth manager Evelyn Partners which surveyed 500 business owners in September and October, found 31 per cent are considering redundancies in the coming year.
It also found 30 per cent said they were likely to default on debt over the next 12 months.
Claire Burden, head of the advisory consulting team at Evelyn Partners, said: ‘The cumulative impact of inflation over recent years is still hitting businesses hard.
‘Many industries have not been able to pass on the full extent of cost increases and this has left some firms fighting for survival. The recent Budget piled more pressure on businesses with the need to plan for rising costs.
‘Firms in labour-intensive sectors, such as hospitality, will be hit particularly hard and some businesses will struggle to keep their heads above water.’
Labour has faced criticism over National Insurance. Andrew Goodacre, boss of the British Independent Retailers Association, said Reeves risked causing the ‘destruction’ of the High Street.
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