NIC increase causes businesses to raise prices

05 Apr 2022

The increase in national insurance contributions (NICs) will cause a third of businesses to raise their prices, according to the results of a survey conducted by the Institute of Directors (IoD).

The survey of 689 businesses found that 29% would increase their goods and services costs to combat the 1.25% increase in NICs, while 37% said that they would try and absorb it.

The IoD survey also found that 15% of businesses would employ fewer people; 4% said they would reduce wages; and 15% stated that they would reduce planned investment into their business.

The percentage of businesses citing interest rates as a concern also rose, with nearly one in three, 32%, saying they are worried, up from 27%.

Kitty Ussher, Chief Economist at the IoD, said: 'It's understandable for businesses to have no choice but to raise prices because of the international cost of energy and other supply problems, but our data now shows that the government's own decision to push ahead with the jobs tax is also of itself pushing up inflation even further, and at the worst possible time.'