National insurance hike will force firms to raise prices and hire fewer staff, new data shows

Businesses will raise prices and employ fewer staff to offset the impact of the national insurance rise, figures reveal. 

Almost one in three business chiefs – 29 per cent – surveyed by the Institute of Directors (IoD) said they will have to raise prices as a result of the tax rise. 

And 15 per cent will employ fewer people in response to the 1.25 percentage points rise this month for both workers and businesses. 

At the same time as the tax rise, soaring energy bills will pile more pressure on struggling firms and families. 

A separate survey by the IoD found that more than half of business leaders said the cost of energy is having a negative impact on their organisation – three times as many as last year. 

Kitty Ussher, chief economist at the IoD, said that the Government’s decision to push ahead with the jobs tax was ‘pushing up inflation even further, and at the worst possible time’. 

Last week Chancellor Rishi Sunak announced that he will raise the threshold at which people start paying NI contributions by £3,000 from July to help lower earners.  

But the Daily Mail and economists said that he should have scrapped the NI hike altogether. 

Ms Ussher 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.

‘For some firms it is also causing them to hire less people.

‘This is a deliberate policy choice and makes life even more difficult for households facing spiralling costs.’