Third of UK SME’s to raise prices as NIC increase takes toll
More than four in ten of the UK’s small and medium-sized businesses say the government’s rise in National Insurance Contributions (NIC) for employers will hurt their operations, with nearly a fifth (18%) warning that the impact will be “significant.” A new study by specialist lender Shawbrook reveals that a third (33%) of these business leaders either plan to, or have already, raised prices on goods or services in response.
The Trends Research survey carried out for Shawbrook offers insights into the outlook of SMEs entering 2025 and how they view recent policy decisions. Notably, 24% of respondents felt that the government does not place sufficient emphasis on the needs of SMEs.
Age also appears to shape perception of the NIC hike. Over three quarters (78%) of business owners aged 55 and above expect a negative impact, compared with only a fifth (20%) of their 18-34-year-old counterparts.
Beyond price hikes, three in ten (30%) SMEs plan to cut costs this year to cope with shifting government policy. A further 21% say they will freeze hiring in 2025, and 16% admit they may have to reduce headcount.
Neil Rudge, chief banking officer for Commercial at Shawbrook, noted: “Our latest research highlights some red flags following the government’s first budget in October. In addition to higher employer NICs, various other policy changes will challenge SMEs, prompting moves like price increases or staff reductions. However, if there is one thing we’ve learned, it’s that SMEs are resilient. They overcame COVID-19 and inflation pressures, and they will adapt to these new NIC costs too.
“Heading into 2025, access to flexible financing remains crucial. Lenders must respond with innovative solutions so businesses can achieve their growth ambitions despite the tougher environment.”