Ahead of the rise in employer national insurance (NI) contributions coming into effect this Sunday, the British Chambers of Commerce Quarterly Economic Survey for Q1, shows business sentiment remains very weak as taxation continues to be the top concern.
Toxic mix as businesses prepare for tax rise
Ahead of the rise in employer national insurance (NI) contributions coming into effect this Sunday, the British Chambers of Commerce Quarterly Economic Survey for Q1, shows business sentiment remains very weak as taxation continues to be the top concern.
59% of surveyed firms cite it as a worry (compared with 63% in Q4 2024), the second highest level on record. At the same time, concern about inflation has risen to 53% (compared with 47% in Q4 2024), the highest level in a year.
Business confidence remains low, with less than half of (48%) businesses expecting their turnover to increase over the next twelve months (49% in Q4). In comparison, pre-Budget confidence was 58% in Q2 2024 and 56% in Q3 2024. Confidence levels are lowest in the retail industry (38%) and the transport and logistics sector (40%).
The survey was carried out before the recent Spending Review, with the fieldwork conducted between 10 February and 10 March. The data from over 5,000 businesses across the UK (91% of whom are SMEs) also shows that most firms are expecting to raise prices.
Tax remains the top concern, with inflation worries on the rise
With the national insurance rise looming in days, concern about taxation remains the main concern for businesses – cited by 59% of responding firms, down slightly from 63% in Q4 2024. This is the second highest level of tax concern since 2017, when the BCC started asking this question. The levels in certain sectors are higher, with 68% transport and logistics firms, and 64% of production and manufacturing businesses raising tax as a concern.
Toxic mix as businesses prepare for tax rise
Ahead of the rise in employer national insurance (NI) contributions coming into effect this Sunday, the British Chambers of Commerce Quarterly Economic Survey for Q1, shows business sentiment remains very weak as taxation continues to be the top concern.
59% of surveyed firms cite it as a worry (compared with 63% in Q4 2024), the second highest level on record. At the same time, concern about inflation has risen to 53% (compared with 47% in Q4 2024), the highest level in a year.
Business confidence remains low, with less than half of (48%) businesses expecting their turnover to increase over the next twelve months (49% in Q4). In comparison, pre-Budget confidence was 58% in Q2 2024 and 56% in Q3 2024. Confidence levels are lowest in the retail industry (38%) and the transport and logistics sector (40%).
The survey was carried out before the recent Spending Review, with the fieldwork conducted between 10 February and 10 March. The data from over 5,000 businesses across the UK (91% of whom are SMEs) also shows that most firms are expecting to raise prices.
Tax remains the top concern, with inflation worries on the rise
With the national insurance rise looming in days, concern about taxation remains the main concern for businesses – cited by 59% of responding firms, down slightly from 63% in Q4 2024. This is the second highest level of tax concern since 2017, when the BCC started asking this question. The levels in certain sectors are higher, with 68% transport and logistics firms, and 64% of production and manufacturing businesses raising tax as a concern.
Concern about inflation has increased since the previous quarter – 53% compared to 47% in Q4. Concern about inflation is most prevalent in the construction industry, with 57% of firms identifying it as a concern. Worry about interest rates remains at 28%, the same level as Q4.
Business confidence remains subdued following Budget measures
Business confidence has fallen further since the immediate aftermath of the Budget. Only 48% of firms say they expect their turnover to increase in the next twelve months, down from 49% in Q4. Once again, this is the lowest figure since the aftermath of the mini budget in late 2022. A fifth (21%) of businesses expect turnover to worsen (the same as Q4), and 31% expect no change.
Thomas Krych / Zuma Press / Avalon
Toxic mix as businesses prepare for tax rise
Ahead of the rise in employer national insurance (NI) contributions coming into effect this Sunday, the British Chambers of Commerce Quarterly Economic Survey for Q1, shows business sentiment remains very weak as taxation continues to be the top concern.
59% of surveyed firms cite it as a worry (compared with 63% in Q4 2024), the second highest level on record. At the same time, concern about inflation has risen to 53% (compared with 47% in Q4 2024), the highest level in a year.
Business confidence remains low, with less than half of (48%) businesses expecting their turnover to increase over the next twelve months (49% in Q4). In comparison, pre-Budget confidence was 58% in Q2 2024 and 56% in Q3 2024. Confidence levels are lowest in the retail industry (38%) and the transport and logistics sector (40%).
The survey was carried out before the recent Spending Review, with the fieldwork conducted between 10 February and 10 March. The data from over 5,000 businesses across the UK (91% of whom are SMEs) also shows that most firms are expecting to raise prices.
Tax remains the top concern, with inflation worries on the rise
With the national insurance rise looming in days, concern about taxation remains the main concern for businesses – cited by 59% of responding firms, down slightly from 63% in Q4 2024. This is the second highest level of tax concern since 2017, when the BCC started asking this question. The levels in certain sectors are higher, with 68% transport and logistics firms, and 64% of production and manufacturing businesses raising tax as a concern.
Concern about inflation has increased since the previous quarter – 53% compared to 47% in Q4. Concern about inflation is most prevalent in the construction industry, with 57% of firms identifying it as a concern. Worry about interest rates remains at 28%, the same level as Q4.
Business confidence remains subdued following Budget measures
Business confidence has fallen further since the immediate aftermath of the Budget. Only 48% of firms say they expect their turnover to increase in the next twelve months, down from 49% in Q4. Once again, this is the lowest figure since the aftermath of the mini budget in late 2022. A fifth (21%) of businesses expect turnover to worsen (the same as Q4), and 31% expect no change.
Profitability confidence also continues to be hit. 39% of firms expect profits to increase over the next year (40% in Q4), while 32% of businesses expect them to fall (same as Q4).
Most businesses are planning to raise prices
Over half (55%) of responding firms say they expect to raise their prices in the next three months, the same elevated level as Q4. While 43% of businesses expect prices to stay the same, and only 3% expect them to decrease.
Labour continues to be far and away the main cost pressure for firms, cited by 73% of businesses (75% in Q4). The issue is most significant for the production and manufacturing sector with 82% reporting it as a challenge, followed by 81% of firms in the transport and logistics sector alongside hospitality businesses.
More firms have cut back on investment plans
As businesses navigate rising cost pressures, 26% of responding firms say they have cut back on investment plans in the past three months, up from 24% in Q4. 20% of business say they have increased investment plans, the same level as last quarter. 54% of businesses say their plans have remained the same.
The issue is more marked in certain sectors, with 40% of hospitality firms and 35% of retailers reporting a scaling back of investment plans.