The UK unemployment rate has increased to 4.7 per cent from March to May 2025, while the annual growth in employees’ average earnings has slowed to five per cent, according to recent data from the Office for National Statistics (ONS).
Job vacancies also fell in June to 727,000 – the 36th consecutive month of decline.
While this evidences a huge challenge for the working-age population out of work, there are also several problems that businesses could face in the months to come.
Interest rate cuts
It is widely expected that the Bank of England will continue to cut its base rate.
This should make borrowing cheaper, enabling businesses to access and repay loans more securely.
However, lower interest rates could also mean a decreased return on your business savings and investments.
Further employment challenges
Businesses across many sectors are already facing employment challenges due to the recent increase in employer National Insurance Contributions (NICs).
Redundancies, shorter working hours, and replacing permanent contracts with agency roles have become increasingly common, especially in the service and hospitality industries.
The next few months are likely to see more businesses making tough decisions around recruitment.
Restructuring, reviewing staff salaries, and cutting overtime may be necessary for businesses to stay afloat.
However, while these choices may help to cut costs, they could harm your business’s efficiency and service quality.
Make sure any recruitment cost-cutting measures do not lead to a more damaging effect on your brand and reputation, as these are what will affect your business’s performance in the long run.
Budgeting and financial management will be more important than ever
With a range of fiscal and employment challenges ahead, effective budgeting and financial management for businesses will be more important than ever.
If you’re concerned about employment costs and keeping your business financially healthy, seeking advice from an experienced accountant is essential.
Don’t let employment costs get out of hand. Contact us today for urgent advice and guidance.
