Nearly half of firms plan to push up prices after Labour’s national insurance hike – and a quarter will cut staff_nhy
Nearly half of firms are planning to push up prices as Labour’s national insurance hike looms.
An official survey found 49 per cent of businesses expect to response to the huge tax raid by passing costs to customers.
Another 26 per cent say they are preparing to cut staff. Some 32 per cent anticipate absorbing the extra burden from profits.
The figures from the Office for National Statistics regular business insights survey underline the impact of the Budget move – which takes effect next month.
Rachel Reeves drummed up another £25billion a year in revenue by increasing the employers’ element of the levy.
Rachel Reeves drummed up another £25billion a year in revenue by increasing the employers’ element of the levy
Questioning companies at the end of last month, the ONS found that the proportion saying they would adapt to NICs rises by increasing prices was nine points higher than in late September.
The percentage saying they would reduce numbers of employees was up by the same number.
The Bank of England told MPs yesterday that the NICs overhaul will push up inflation.
In a letter to the Treasury Committee, Mr Bailey said: ‘Bank staff estimate that the change works to increase firms’ employment costs by just short of 2 per cent.
‘Firms may choose to absorb this increase in costs within their profit margins, pass on the cost to consumers through higher prices, or mitigate the impact by reducing nominal wages or employment.’
The change contributed 0.1 to 0.2 percentage points to an expected one percentage point near-term rise in inflation that the Bank recently projected in a quarterly economic report.
