Key economic challenges for businesses in 2025

One of the main challenges for businesses in 2025 will undoubtedly be the “huge increase in employment costs” following the Autumn Budget.

Higher employer National Insurance contributions combined with an increase in the National Living Wage from April 2025 mean companies across Coventry & Warwickshire – and the UK – are faced with some difficult decisions.

Taxation and inflation are also significant concerns for businesses in the year ahead, according to research conducted by the British Chambers of Commerce (BCC).

David Bharier, Head of Research at the British Chambers of Commerce, said: “Our research shows that taxation and inflation remain the top two concerns for businesses. Many businesses think the recent announcements such as the NICs increase, and Employment Rights Bill will lead them to increase their prices as they struggle to manage input costs.

“Our latest forecast expects CPI to remain above the Bank of England’s target until the end of 2026, mainly due to increased business costs and global trade uncertainty.

“Business investment will remain challenging unless firms are given extra help to deal with rising costs.

Pushing forward with business rate reform would be one crucial step to take, coupled with a clear industrial strategy to unlock growth.”

Jane Gratton, Deputy Director Public Policy at the BCC, added that the latest ONS Labour Market data revealed that the unemployment rate has also risen slightly, showing ongoing challenges in the labour market.

“Higher employer National Insurance Contributions and an increase in the National Living Wage from April, means firms are facing difficult decisions,” she said.

“Many say they will have to raise prices, put recruitment and investment plans on hold and look for other ways to reduce their costs.

“Although the level of vacancies in the economy is now fast approaching the pre-pandemic level, this does not mean the recruitment crisis is over. Our latest research shows that over three quarters of SMEs are still struggling to find staff with the skills they need.

“With firms reconsidering their recruitment plans due to rising employment costs, there is a risk this could impact the labour market in the months ahead. But it is crucial the Government continues to take action to tackle the skills crisis, boost workforce health and ease economic inactivity.”