UK business leaders have urged the government not to raise employment costs in the next autumn’s budget, warning that higher taxes could force small firms to understate prices and frustrate the fall in prices.
A new survey carried out by Labor Hero found that 86 per cent of 1,000 business leaders are worried about what the budget will mean for their companies, with 59 per cent saying they believe the government should take the needs of small businesses into account when setting financial policy.
The concern comes after national insurance contributions (NICs) rose from 13.8 per cent to 15.05 per cent in April – prompting many smes who have already reduced their fees.
If Chancellor Rachel were to raise employment-related taxes again, business groups said it would “harm the government’s mission to drive economic growth and control recession.”
Almost half of small and medium-sized businesses (49 percent) say they will raise prices if labor costs rise, while 33 percent say they will delay hiring and 24 percent will look at layoffs, according to Labor Hero’s findings.
The report also noted that many small firms are still recovering from the effects of Reeves’ first budget last year, where 72 percent of leaders said it had a negative impact on their business.
Despite these concerns, hero employment data showed signs of strengthening in the UK labor market, with employment rising month-on-month in October and up year-on-year.
Kevin Fitzgerald, managing director at Entry Hero, said the government must learn from past mistakes.
“When you have less tax capabilities, you tax them all,” he said. “Higher costs lead to higher prices, fewer jobs, and less money in people’s pockets.”
Fitzgerald pointed out that SMEs – which employ the majority of the UK’s workforce – are key to reviving growth and keeping inflation in check.
“The autumn budget is an opportunity to show small firms that they understand that the government understands their role in the economy,” he said. “If teachers want to keep Britain working, they need to go back to small businesses – they are the ones who are burdened.”
Business leaders across the UK are pressing the Treasury to avoid further tax increases on wages and investment when Reves delivers his budget later this month.
Many fear that another round of tax cuts could cripple income, cripple jobs, and undermine confidence among small firms already struggling with higher wage costs, prices, and borrowing costs.
With the budget expected to focus more on strengthening tariffs to make up for the shortfall in tariffs, industry is warning that punishing small firms could prove the government wants to dominate.
