UK SMEs are preparing for an average revenue loss of £138,000 in 2025.
- Nearly a quarter of business leaders are pessimistic about the 2025 business outlook.
- Return-to-office mandates raise concerns about employee retention for 50% of firms.
- Top concerns include inflation, economic instability, and upcoming tax policies.
- Despite challenges, over half of businesses plan workforce expansion in the coming year.
Small and Medium Enterprises (SMEs) in the United Kingdom are bracing for substantial financial challenges as 2025 approaches. Recent findings suggest that businesses are anticipating an average revenue loss of £138,000, with a significant 25% of them expecting losses to surpass £100,000. This outlook is shaped by Labour’s Autumn Budget and various macroeconomic factors.
One of the pivotal issues confronting business leaders is the proposed £40 billion tax rise, half of which directly affects businesses. Although a small interest rate cut by the Bank of England provides some relief, inflation and rising costs remain top concerns for 50% of SMEs. Furthermore, 45% of leaders express unease over the UK’s economic instability, while Labour’s tax policies worry 37% of them.
The political landscape further exacerbates these concerns, as 54% of businesses attribute operational instability to the current climate. Alarmingly, 83% of corporate leaders believe that modifications to Labour’s budgetary policies and the increased national minimum wage will negatively affect their revenue streams.
The internal ramifications are considerable as well. Labour’s tax strategies are anticipated to adversely influence employee salaries, according to 76% of business leaders. Moreover, 60% are contemplating workforce reductions and hiring freezes.
Despite the gloomy forecast, a majority of leaders see potential positives. A notable 62% are hopeful that Labour’s focus on improving worker rights will enhance employee mental health, providing a potential offset to other challenges.
Adaptation to shifting workplace trends is critical for UK SMEs. Half the business leaders are considering trialling a four-day work week, although there is scepticism about its success under Labour’s administration. Additionally, 61% support a return-to-office scheme for over three days a week, foreseeing benefits such as increased productivity, collaboration, and professional growth.
However, return-to-office policies are not without their detractors. Fifty percent of leaders fear that mandated office presence could negatively impact employee retention, and 26% worry about the potential strain on employees’ work-life balance. Further concerns include possible increases in operational costs due to these changes.
In the face of these challenges, more than half of UK SMEs plan to expand their workforce in the coming year. IT and tech roles are at the forefront of hiring priorities, with 48% of businesses concentrating on these areas. AI-specific roles are also in demand, with 24% targeting these positions and firms willing to pay a premium for such expertise.
Fiverr’s 2024 UK Future Workforce Index indicates a strong inclination towards freelancers, as they are seen as essential in bridging skills gaps. Over 55% of firms have already integrated freelancers into their business models, with 32% relying on their AI expertise. Looking forward, 45% of leaders plan to increase their reliance on freelancers.
Hila Harel from Fiverr underlined the importance of freelancers in tackling economic and workplace challenges. She said, “As the UK navigates upcoming challenges, it’s encouraging to see business leaders increasingly turning to freelancers to help tackle economic instability and evolving workplace trends.”
UK SMEs are navigating a complex economic landscape, balancing challenges with potential opportunities for workforce innovation.
