A majority of British businesses plan to cut pay increases in response to upcoming payroll tax hikes, according to two surveys. Research firm Incomes Data Research (IDR) found that 69% of employers are likely to slow wage growth, with over half “extremely likely” to do so. One-third may cut jobs, while others will absorb costs through lower profits.
The Bank of England (BoE) is monitoring these reactions ahead of its February 6 interest rate decision. While a 0.25% rate cut is expected, the longer-term outlook is uncertain.
Meanwhile, a Confederation of British Industry (CBI) survey shows businesses remain pessimistic, with slight improvement from December.
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Finance Minister Rachel Reeves defends the tax hikes as necessary for stabilizing public finances. Earlier on reeves: