A majority of UK businesses plan to cut pay increases

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.

Info via Reuters, more here.

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

• UK’s fin min Reeves to release corporate pension funds to help investment fuel growth

This article was written by Eamonn Sheridan at www.forexlive.com.