UK businesses are preparing to cut jobs or slow recruitment ahead of rising National Insurance contributions and the National Minimum Wage. A survey by the Chartered Institute of Personnel and Development (CIPD) found that over a third of employers plan to reduce staff, while many intend to raise prices to offset rising employment costs. Separate research from the Federation of Small Businesses shows confidence among small firms has dropped to its lowest level in a decade, excluding the Covid pandemic.

From April, National Insurance for employers will rise from 13.8% to 15% on salaries above £5,000, while the minimum wage will also increase. The CIPD warns that industries reliant on large workforces, such as retail and hospitality, will be hardest hit. A quarter of businesses surveyed are cancelling or scaling back investment plans, raising concerns about economic stagnation. Major retailers, including Tesco and Amazon, have warned that shop closures and job losses are inevitable unless the government rethinks its tax policies.

The Treasury insists these changes are necessary to stabilise public finances. However, critics argue that the added financial strain could suppress growth and increase uncertainty. The British Chambers of Commerce also reports declining business confidence, with over half of firms expecting to raise prices soon.

The latest figures from the Office for National Statistics show unemployment edged up to 4.4% between October and December 2024. The upcoming employment report should reveal more about rising costs’ impact on job security. Meanwhile, inflation remains above the Bank of England’s target, expected to peak at 3.7% this year before stabilising.