More than a fifth (21 percent) of small and medium sized employers say they will cease hiring activity in 2025, while 16 percent say they will be forced to cut jobs.
These were two of the key findings from research conducted by specialist lender Shawbrook. It found that more than two-fifths (42 percent) of SME leaders say the national insurance increase in April will negatively affect them.
Three-in-ten (30 percent) SMEs reported that they will have to cut costs as a result of changing government policy.
A third (33 percent) have warned that they will be forced to raise their prices, while 24 percent of SMEs believe the government views them as a low priority.
The research found that older business owners were much more likely to see the NICs increase as negative for their business. More than three-quarters (78 percent) of leaders aged 55 and above told the survey they expect the change to impact their business “badly”. In contrast, only 20 percent of 18-34 year old leaders said this.
Neil Rudge, chief banking officer for commercial at Shawbrook, said: “Our latest research, which delves into the attitudes of business owners across the UK, highlights some red flags following the government’s first budget in October. In addition to the rise in NICs for employers, a range of other policy changes will also impact SMEs, creating a challenging environment. Many businesses will likely respond by raising prices or reducing staff—strategies that could have far-reaching implications for the broader economy.
“However, if there’s one thing we’ve learned about SMEs, it’s their resilience and adaptability. Just as they navigated challenges like Covid-19 and rising inflation, they will find ways to overcome the NI hurdle and adjust to the evolving policy landscape.
“Access to financing will remain critical in 2025, and it’s vital that lenders stay flexible and responsive, offering innovative solutions to help businesses navigate these challenges and achieve their growth ambitions.”
