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According to a survey conducted in the second quarter of 2026, the main external concern for businesses in the United Kingdom, compared with the previous quarter, was that of inflation, at 66 percent of responding firms. Taxation was the next most concerning external issue, at 51 percent of firms, with business rates seen as the third-most important issue this quarter, at 35 percent of firms.

Businesses take a hit in the 2025 budget

After promising not to raise taxes for working people in the 2024 election, the Labour government's first budget that Autumn sought to increase revenue via higher taxes for employers. From April 2025 onwards, the rate of National Insurance Contributions for employers increased from 13.5 percent to 15 percent. The UK's minimum wage also increased that month, rising from 11.44 pounds per hour to 12.21 pounds for workers aged 21 and over, with minimum earnings for younger workers also rising. 

Job losses accelerating in 2025 

In recent years, the UK's labor market has gradually cooled, with the unemployment rate slowly ticking up from a low of 3.6 percent in Summer 2022. Additionally, there were a record 1.3 million job vacancies reported in May of that year, highlighting how overheated the jobs market was at that time. As of 2025, this is no longer the case, with the unemployment rate at 4.6 percent in April 2025, the highest since 2021, with job vacancies also falling to a four-year low. Since the start of the year, the number of employees on payrolls has fallen quite substantially, with approximately 230,000 jobs lost since the start of the year.