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.
Finance Minister Rachel Reeves defends the tax hikes as necessary for stabilizing public finances. Earlier on reeves: