2025 is shaping up to be a year of reckoning for businesses across the UK. Rising wages, increased statutory payments and soaring Employer National Insurance Contributions (NICs) are creating a financial perfect storm. With NICs climbing from 13.8% to 15% and a sharp drop in the secondary threshold, the pressure on employers is mounting fast.
A recent survey of 2,000 UK businesses conducted by online printing company instantprint reveals that one in four companies have no plan to deal with these rising costs and even more worrying, 43% of business owners admit they’re unsure how to drive continued growth in this new landscape. It’s clear: businesses must act now to protect their profitability and their workforce.
The reality
The numbers are stark. Our survey highlights the top concerns for UK business owners:
- Rising payroll costs (22%): The National Living Wage rises to £11.44 per hour, creating an annual increase of £1,872 per employee.
- Reduced profitability (25%): The combination of higher wages, increased NICs, and rising statutory payments is eating into margins.
- Forced job losses (7%): Some businesses fear redundancies as a way to manage the spiralling wage bill.
- Reduced business growth (19%): Financial uncertainty is causing many business owners to put expansion plans on ice.
- Pricing pressure (27%): Many businesses are being forced to raise prices but at the risk of alienating their customers.
“With wages and NICs going up, we’re running out of options,” one owner shared, underscoring the desperation many feel.
The lowdown
So, what does this mean in practical terms? For a small business with 10 employees on the National Minimum Wage, the additional cost looks like this:
- Wage increases: £18,720 more per year.
- Employer NICs: £7,903.60 more per year.
- Statutory payments: Increased sick pay, maternity, and other statutory payments add even more pressure.
For many businesses, these increases are simply too much to absorb.
The business response
Despite the dire situation, businesses are not just sitting back – they’re adapting fast. Here are some of the most common survival strategies:
- Adjusting operations (28%): Streamlining processes and outsourcing non-core activities.
- Passing costs to customers (22%): Raising prices while working hard to maintain value.
- Cutting expenses or improving efficiency (29%): Renegotiating B2B supplier contracts and eliminating waste.
- Restructuring pay (11%): Reducing staff hours or adjusting compensation structures.
- Investing in automation (10%): AI and technology are being used to reduce payroll costs.
Recruitment and retention crisis
But this cost squeeze isn’t just about numbers – it’s about people. Nearly half of businesses fear rising costs will hurt employee satisfaction and retention. So, what are some of the things companies are looking to roll out to keep talent on board?
- Flexible working arrangements: Cutting down on commuting costs and improving morale.
- Performance-based incentives: Offering pay based on performance to ensure sustainability.
- Upskilling opportunities: Giving employees a chance to grow with the company through internal mentorship programmes.
How to futureproof?
Businesses across the UK are taking decisive steps to stay ahead in an evolving market. With economic pressures and shifting consumer demands, companies are focusing on efficiency, technology, and cost optimisation to ensure long-term success.
Online print provider instantprint has identified four key strategies businesses are adopting to futureproof their operations:
- Prioritising efficiency – From concept to completion, businesses are streamlining workflows to improve productivity and reduce turnaround times.
- Smarter working practices – Virtual meetings are replacing in-person ones to cut costs and enhance flexibility.
- Leveraging technology – Automation tools are reducing administrative overheads and improving operational efficiency.
- Optimising costs – Businesses are refining processes and sourcing from cost-effective suppliers to maintain profitability.
“As businesses navigate ongoing challenges, the focus is shifting towards smarter, more agile ways of working,” says Laura Mucklow, head of instantprint. “Whether expanding your services, exploring new revenue streams or investing in smarter ways of working, taking the time to have a critical review of business operations ahead of the changes is going to be key to survival.”
The bottom line
While 2025’s rising costs pose serious challenges, businesses that act now will not only survive but thrive. The key to success? Prioritise efficiency, innovate with technology and focus on employee satisfaction. Those who adapt will emerge stronger, more resilient and ready to seize new opportunities.
