A record number of British business leaders are bracing for unprecedented cost pressures over the coming year, driven by tax hikes, mounting energy bills and rising pay demands, according to a new survey by the Institute of Directors (IoD).
The poll revealed that 89% of respondents expect their costs to climb, with only 2% anticipating a decline.
Pessimism within the boardroom has soared, with a net balance of 64% of bosses expressing a gloomy economic outlook—close to the peak registered at the height of the pandemic. Almost half of those surveyed said they would reduce headcount to cope with Labour’s forthcoming £25bn National Insurance rise, due to take effect next month. Two in five plan to increase prices to offset these additional costs.
Anna Leach, the IoD’s chief economist, highlighted the wider concerns facing UK companies, from the cost of energy and inflationary pressures to uncertainty stemming from policy decisions in the US. “Amidst downgrades to UK growth forecasts, businesses remain concerned about the health of the UK economy, as well as tax and regulatory burdens,” Leach said. “Around half are expecting to reduce employment in response to rising costs.”
Meanwhile, the Bank of England’s deputy governor, Sir Dave Ramsden, has cautioned against lowering interest rates prematurely, citing stubbornly high wage growth. Inflation climbed to 3% last month and is expected to approach 4% by year-end—well above the Bank’s 2% target.
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