The increase in employers’ National Insurance Contributions (NICs) by an extra 0.5% from April 2011 is causing much concern within the small business community, as many companies fear the rise may have a significant effect on the growth of the economy and firm’s hiring decisions, according to Bibby Financial Services.

The firm claims that the British Chambers of Commerce’s idea for the Government to scrap next year’s planned NICs increase and instead raise revenues by increasing VAT to 18.5% could be far less damaging to businesses.

Edward Rimmer, chief executive of Bibby Financial Services, said: “The Chancellor’s announcement to increase National Insurance Contributions has come as a nasty surprise to small businesses across the UK