Business confidence remains fragile after firms swallowed the jump in tax and labour costs in April, according to new research.
A survey by the British Chambers of Commerce (BCC) found that most firms continue to see tax pressures as their main concern going forward.
The influential business group urged the Government to rule out further tax hikes for firms later this year as a result.
The quarterly economic survey showed that 56% of firms said they were particularly concerned about their tax burden, with this followed by worries over rising inflation.
Nevertheless, the proportion of businesses expecting to put up prices over the next three months eased to 44%, after spiking at 55% in the first quarter of the year.
The BCC said the research found that “confidence among businesses remains weak”, with less than half, 49%, of firms expecting to increase their turnover in the next 12 months.
This was marginally improved from the previous quarter but still the second lowest figure since the aftermath of the mini budget in late 2022.
A fifth (20%) of businesses expect turnover to worsen and 31% expect no change, the survey found.
Shevaun Haviland, director general of the British Chambers of Commerce, said: “The rising cost of doing business means confidence levels remain at their lowest levels since 2022.
“However, it’s encouraging to see a drop in the number of firms planning to raise prices.
“Last week, the Prime Minister acknowledged at the BCC’s global annual conference that business has been asked to shoulder a huge tax burden.
“We now need the Government to rule out any further business taxes in this year’s budget.”
Meanwhile, around a quarter of firms said they are also reducing their investment plans due to recent cost increases.
David Bharier, head of research at the BCC, said: “April’s rise in national insurance contributions has cemented tax as the dominant concern for firms.
“Businesses are entering a new employment landscape marked by structurally higher labour costs and administrative requirements, fuelling increased anxiety about redundancies.”
