Key facts
- UK businesses are experiencing escalating costs due to domestic policy decisions, impacting investment and recruitment.
- The British Chambers of Commerce (BCC) highlights that a decade of policy choices has led to a significant increase in business expenses.
- BCC modelling indicates that for a typical SME, policy-driven costs have risen by over 70% in the last 10 years.
- Business investment has fallen to its lowest level since the pandemic, with only 17% of firms increasing investment in the past three months.
- The BCC is urging the government to cut business costs in the upcoming autumn budget to stimulate growth.
A decade of domestic policy decisions has created a significant 'cost stack' for UK businesses, hindering their growth, investment, and recruitment efforts. According to Shevaun Haviland, Director General of the British Chambers of Commerce (BCC), successive governments have piled on costs through increases in minimum wage, National Insurance, business rates, employment rights, and various levies. This cumulative impact means businesses have less capital for investment in new machinery, technology, or expansion.
The BCC's modelling suggests that for a typical small to medium-sized enterprise (SME) employing 50 people with a turnover of £5 million, these policy-driven costs have risen by over 70% in the past 10 years. This has led to a stark decline in business investment, with only 17% of firms increasing investment in the last three months, the lowest level recorded since the pandemic.
While some targeted measures, like business rate cuts for pubs, clubs, and music venues in England, have been welcomed, the BCC argues that broader reforms are urgently needed. The organization stresses that business resilience alone is insufficient for the country's growth ambitions and urges policymakers to reduce the cost burden on firms. The upcoming autumn budget is seen as a pivotal moment to address these concerns and provide businesses with the confidence and capacity to invest and grow.