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SMEs across the UK are preparing for significant financial challenges in 2025, with new research pointing to an expected average turnover loss of £138,000 per business.
A quarter of businesses expect losses of more than £100,000 due to the financial pressures arising from Labour’s autumn budget, according to a survey conducted by freelancer platform Fiverr.
Despite a modest rate cut from the Bank of England, Labour’s proposed £40 billion tax increase (half of which will have a direct impact on businesses) has increased concerns among SMEs as they look ahead to the year ahead. Key issues affecting business leaders include inflation and rising costs (50%), economic instability in Britain (45%) and the wider implications of Labour’s tax policy (37%).
Revenue challenges and workforce reductions
The recent Budget announcement has caused widespread concern among UK businesses, with more than half (54%) citing the current political climate as one of the main causes of operational instability. An overwhelming 83% believe that proposed changes to Labour’s budget policy and the increase in the national minimum wage will have a negative impact on their income.
Alarmingly, 76% of business leaders expect Labour’s tax policy to have a negative impact on employee wages, while 60% are considering cutting workforces and freezing hiring over the next year. These expected staff adjustments reflect the increasing financial pressure on SMEs as a result of the new budgetary measures.
Mixed feelings about workplace trends
Despite these challenges, some optimism remains among business leaders. The data shows that 62% believe Labour’s focus on improving workers’ rights could have a positive impact on workers’ mental health, offering a glimmer of hope in an otherwise turbulent outlook.
British companies are also open to adopting new trends in the workplace. Half of leaders surveyed said they would be willing to try a four-day working week, although 24% doubt its success under the Labor administration. Additionally, 61% support a return-to-office (RTO) model of at least three days per week, with improved productivity (61%), improved collaboration (40%) and better professional development opportunities (38%) as main advantages are mentioned. .
However, leaders also recognize potential disadvantages of mandating office visits. Half believe that enforcing RTO policies can be detrimental to employee retention, and 26% fear it could cause friction and lower morale in the workplace. Nearly a quarter are concerned about the impact on employees’ work-life balance and the potential for higher operational costs as a result of the service.
Focus on AI and technical roles in hiring plans
Despite economic pressures, more than half (55%) of UK businesses plan to increase their workforce by 2025, while 33% plan to maintain current workforce levels. Hiring priorities indicate an increase in digital innovation, with almost half (48%) targeting IT and technical roles, and 24% targeting positions specific to artificial intelligence (AI).
Fiverr’s UK Future Workforce Index 2024 shows that companies are willing to offer an average of 45% higher wages to candidates with AI expertise, with more than 80% of leaders willing to pay a premium for these skills. In contrast, demand for creative and design roles remains subdued, with only 19% of companies planning staff in this area.
Advances in AI are influencing hiring decisions, with 43% of companies citing this as a reason for scaling back hiring. Regulatory changes (34%) and budget constraints due to the ongoing cost of living crisis (33%) are also important factors.
Freelancers are the key to bridging skills gaps
Freelancers are emerging as crucial contributors to the workforce, with 55% of companies already integrating freelancers into their teams. Nearly a third (32%) use freelance expertise in the field of AI. Looking ahead, half of UK business leaders see freelancers as essential to achieving their goals by 2025, and 45% plan to increase their reliance on freelancers in the coming year.
Hila Harel, director of international growth at Fiverr, commented: “As Britain tackles the challenges ahead, it is encouraging to see business leaders increasingly turning to freelancers to tackle economic instability and changing workplace trends. to take. As the four-day workweek and return-to-the-office policies gain traction, it’s clear that workplace flexibility is a top priority. As 2025 approaches, we look forward to seeing freelancers play a greater role in supporting businesses – not only in weathering the uncertainty, but also in driving growth and innovation amid ongoing challenges.”