As tax hit looms, UK employers prepare to push up prices

UK employer Philip Thorley sees only one direction for his prices once a tax hike for British businesses kicks in next week: up.

- Rachel Reeves

Pub owner Philip Thorley sees only one direction for his prices once a tax hike for British employers kicks in next week: up. That may be bad news for the Bank of England, which plans to lower interest rates to help the sluggish economy. Thorley, who owns 18 hospitality sites around the seaside town of Broadstairs, said he could not absorb all the extra cost, which follows a painful run of inflation in recent years. "We feel as though we've been fighting Mike Tyson with one hand tied behind our back," Thorley said as drinkers in his Cramptons sports bar watched cycling and cricket on screens.

"We're not a sponge. At some point we've got to look at it and say enough's enough." Many business owners are bracing for the 25 billion-pound ($33 billion) hike in employers' social security contributions-announced in October by finance minister Rachel Reeves and which comes into force on Sunday. Reeves has described her first budget, which included the biggest package of tax increases in three decades, as a "once-ina-generation" change to invest in public services and modernising the economy. On Wednesday, she told lawmakers that there were costs to her tax changes but being irresponsible with the public finances would be worse.