UK businesses are bracing themselves for a surge in costs as a result of tax hikes, energy bills, and wage pressures, according to a recent survey by the Institute of Directors (IoD). The survey also revealed that almost half of the businesses surveyed are planning to cut jobs in response to the government’s proposed £25 billion National Insurance (NI) raid.
The survey, which was conducted among 1,000 business leaders, highlighted the growing concerns of UK businesses as they face an unprecedented increase in costs. The combination of rising energy bills, increased taxes, and pressure to raise wages is putting a strain on businesses, with many struggling to stay afloat.
The proposed NI hike, which is set to come into effect in April 2022, will see employers’ national insurance contributions increase by 1.25%, with the aim of funding the rising costs of social care. This move has been met with widespread criticism from business leaders, who argue that it will have a detrimental impact on the economy and hinder the country’s recovery from the pandemic.
The IoD survey revealed that 45% of businesses are planning to cut jobs in response to the NI hike, with many citing the increased costs as the main reason for their decision. This is a worrying trend, as job cuts will not only have a negative impact on the economy but also on the livelihoods of individuals and families.
In addition to the proposed tax hike, businesses are also facing soaring energy bills. The recent surge in gas prices has led to a sharp increase in energy costs, with some businesses reporting a 50% increase in their energy bills. This is putting a strain on businesses, particularly those in energy-intensive industries, and is likely to have a knock-on effect on consumer prices.
The IoD survey also highlighted the pressure businesses are facing to increase wages. With the economy on the road to recovery and a shortage of skilled workers, many businesses are finding it difficult to compete for talent. As a result, they are facing pressure to increase wages to attract and retain employees. However, this is adding to the already mounting costs for businesses, further exacerbating the situation.
The combination of these factors has left businesses in a difficult position, with many struggling to keep their heads above water. The IoD survey revealed that 77% of businesses are expecting their costs to increase over the next year, with 45% predicting a significant increase. This is the highest level of cost expectations recorded by the IoD since it began conducting this survey in 2010.
The survey also highlighted the impact of these rising costs on businesses’ growth plans. Many businesses reported that they are having to put their growth plans on hold or scale them back due to the increased costs. This is a concerning trend, as it could hinder the country’s economic recovery and lead to long-term damage to the business landscape.
In light of these challenges, it is essential that the government takes action to support businesses and alleviate the burden of these rising costs. The IoD has called on the government to reconsider the proposed NI hike and explore alternative ways to fund social care. They have also urged the government to provide targeted support for businesses facing the highest cost increases, such as those in energy-intensive industries.
Despite these challenges, it is important to remain positive and optimistic about the future. UK businesses have shown resilience and adaptability throughout the pandemic, and there is no doubt that they will continue to do so in the face of these challenges. With the right support from the government, businesses can overcome these hurdles and continue to drive the country’s economic recovery.
In conclusion, the IoD survey has revealed the growing concerns of UK businesses as they face a surge in costs. The proposed NI hike, soaring energy bills, and pressure to increase wages are putting a strain on businesses, with many having to cut jobs and scale back their growth plans. It is crucial that the government takes action to support businesses and ensure that the country’s economic recovery is not hindered by these challenges. With the right support, UK businesses can overcome these obstacles and continue to thrive.
