During recent months, business groups have warned about the challenges businesses are facing from government policies, including the rise in National Insurance contributions in April 2025 and strengthened employment rights – see for example views from the British Chambers of Commerce and the Federation of Small Businesses. The minimum wage is also due to rise in April.

This comes in the context of an economy with little growth in the output of businesses over the past couple of years.

This Insight explores how business views vary, including looking at how businesses see their own performance and the challenges faced by businesses of different sizes.

How do we know business views?

In this article we use the Business Insights and Conditions Survey from the Office for National Statistics to explore what businesses have to say about how they are doing and their concerns for the future. This allows us to look at how perceptions vary across businesses and how they have changed.

The Business Insights and Conditions Survey is a voluntary fortnightly survey of businesses. About 10,000 businesses respond to each round of the survey; this is just over a quarter of those that are asked to respond. It covers production industries in the UK along with construction, retail and services industries in Great Britain. It does not cover agriculture or financial services. The statistics from the survey are classed as ‘official statistics in development’.

How do the UK’s businesses say they are doing at the moment?

When asked recently, 23% of businesses said that their overall performance had decreased over the last year, and 15% said that overall performance had increased. 50% of businesses said that their performance had stayed the same, and 12% were not sure.

Larger businesses were more likely to report that their performance had increased than smaller ones.

There hasn’t been much change in these figures over the last couple of years, as shown by the charts below.

Two charts, both based on business answers to the question "How would you describe your business’s overall performance in [last month], compared with the same calendar month last year?" The first chart shows trends from March 2022 to January 2025, which are relatively stable. Only a small proportion of businesses thought their performance has got better over the past year. The second chart shows variation by workforce size for January 2025, with data suggesting that larger businesses are more likely to have thought performance got better.
Source: Office for National Statistics, Business insights and impact on the UK economy dataset for wave 126, 20 February 2025, table ‘Performance TS (WTD) (1)’ – figures for businesses that have not permanently stopped trading, most recent survey period was 3 February 2025 to 16 February 2025.

What are the problems that businesses are currently facing?

The most common challenge that businesses report as currently affecting their turnover is economic uncertainty (29%). More businesses are reporting this as a challenge now than a few months ago, although the percentage is lower than in 2022. This can be seen in the charts below.

Other common challenges – each faced by just under a fifth of businesses – are the cost of materials (18%), the cost of labour (18%, which will include the cost of pay), competition (18%), and insufficient domestic demand (17%, in other words, not enough UK buyers for what the business is selling).

Almost a third of businesses (31%) say they are not currently experiencing any challenges that affect business turnover, and a further 7% are not sure.

Two charts, both based on business answers to the question "Which of the following challenges, if any, are currently impacting your business's turnover?" First chart shows challenges in February 2025, with economic uncertainty the most common answer. Second chart shows how the proportion identifying economic uncertainty as a challenge has changed (as described in the main text).
Source: Office for National Statistics, Business insights and impact on the UK economy dataset for wave 126, 20 February 2025, table ‘Turnover Challenges TS (WTD)’ – figures are for businesses that are currently trading, most recent survey period was 3 February 2025 to 16 February 2025.

What do businesses expect for the future?

When asked in the first half of February, 20% of businesses said that they expected their performance would increase over the next 12 months, 16% thought it would decrease, 43% thought it would stay the same and 20% were not sure.

The proportion of businesses that expect their performance to decrease has grown over the past six months.

There is more optimism in larger businesses; businesses with at least 50 people in their workforce are twice as likely to think their performance will increase in the next 12 months than businesses with fewer than 10 people in their workforce, as shown in the chart below.

Two charts, both based on business answers to the question "How do you expect your business’s overall performance to change over the next 12 months?" First chart shows trends from April 2022 to February 2025, showing that most businesses think performance will stay the same over the next twelve months. Second chart shows variation by workforce size for February 2025, with data suggesting that larger businesses are more likely to be optimistic.
Source: Office for National Statistics, Business insights and impact on the UK economy dataset for wave 126, 20 February 2025, table ‘Performance TS (WTD) (2)’ – figures for businesses that have not permanently stopped trading, most recent survey period was 3 February 2025 to 16 February 2025.

What are the main concerns for the immediate future?

When looking ahead to March 2025, the most common main concern for businesses is falling demand (18% of businesses). This has been the main concern for about this many businesses since the beginning of 2024.

The next most common main concern for businesses is taxation (15% of businesses). This has become more common as the main concern for businesses since the summer of 2024. The Chancellor announced changes to National Insurance contributions at the Budget in October 2024.

About a quarter (26%) of businesses said they did not have concerns for their business.

These trends can be seen in the charts below.

Two charts, both based on business answers to the question "Which of the following, if any, will be the main concern for your business in [next month]?" First chart shows main concerns for March 2025, with falling demand of goods and services the most common answer and taxation the second most common. Second chart shows how the proportion identifying these concerns has changed (as described in the main text).
Source: Office for National Statistics, Business insights and impact on the UK economy dataset for wave 126, 20 February 2025, table ‘Business Concerns TS (WTD)’ – figures for businesses that have not permanently stopped trading, most recent survey period was 3 February 2025 to 16 February 2025. Chart shows all answers that could be given by businesses, aside from ‘exchange rates’ and ‘not sure’.

What are businesses planning in response?

About a fifth (18%) of businesses that are currently trading are expecting to raise prices in March 2025. There are a range of types of cost pressures that might lead to price rises, but the cost pressure that was mentioned most often was labour costs; 28% of businesses cited labour costs as a reason for considering raising prices.

These pressures may be linked to the coming National Insurance changes and increases to the national minimum wage (the main national living wage rate is due to increase by 6.7% in April 2024, not adjusted for inflation). An earlier survey by the Bank of England suggested that the National Insurance changes might lead to a mixture of lower profit margins, fewer employees, increased prices and lower employee wages at firms.

However, most businesses (80%) say they are not planning to change the size of their workforce immediately. Most (80%) expect their number of employees to stay the same in March, 5% expect their number of employees to increase, 5% expect their number of employees to decrease and 9% are not sure. About a fifth of larger firms, with workforces of 50 or more, expect their number of employees to increase in March.

About the author: Lorna Booth is the head of the Economic Policy and Statistics section of the House of Commons Library.

Image credit: MJ Richardson on geograph.org.uk, CC BY-SA 2.0