British business leaders have urged the government not to increase employment costs in the upcoming autumn budget, warning that higher taxes could force small businesses to raise prices and worsen inflation.
A new survey from Employment Hero found that 86 percent of 1,000 business leaders are worried about what the budget will mean for their companies. 59 percent said they believe the government does not take the needs of small businesses into account when setting financial policy.
There is concern after employers’ national insurance contributions (NICs) rose from 13.8 per cent to 15.05 per cent in April – a move that many SMEs say has already put a strain on their finances.
If Chancellor Rachel Reeves raises employment-related taxes again, business groups say it could “harm the government’s mission to drive economic growth and control inflation.”
Nearly half of small and medium-sized businesses (49 percent) said they would raise prices if labor costs rise, while 33 percent said they would delay hiring and 24 percent would consider layoffs, according to Employment Hero’s findings.
The report also found that many small businesses are still recovering from the impact of Reeves’ first budget last year, which 72 percent of executives said had a negative impact on their business.
Despite these concerns, Employment Hero data showed signs of resilience in the UK labor market, with employment rising 2.3 percent month-on-month and 1.9 percent year-on-year in October.
Kevin Fitzgerald, UK managing director at Employment Hero, said the government needed to learn from the mistakes of the past.
“When you tax small businesses, you tax everyone,” he said. “Higher costs lead to higher prices, fewer jobs and less money in people’s pockets.”
Fitzgerald argued that SMEs – which employ the bulk of the UK workforce – were key to reviving growth and tackling inflation.
“The autumn budget is an opportunity to show small businesses that the government understands their role in the economy,” he said. “If ministers want to keep Britain running, they must support – not burden – small businesses.”
Business leaders across the UK are urging the Treasury to avoid further tax rises on jobs and investment when Reeves delivers her budget later this month.
Many fear another round of tax hikes could stoke inflation, slow job creation and undermine the confidence of smaller businesses already struggling with higher labor costs, energy prices and loan interest rates.
With the Budget expected to focus heavily on tightening fiscal policy to plug a multi-billion pound deficit, industry insiders warn that penalizing small businesses could prove counterproductive – and dampen growth at the very moment the government is trying to boost it.
