SMEs across the UK are set to face major financial challenges in 2025, with new research suggesting an expected average revenue loss of £138,000 per business.
According to a study by freelance platform Fiverr, a quarter of businesses expect losses of more than £100,000 due to financial pressures caused by Labour’s Autumn Budget.
Despite a modest cut in interest rates by the Bank of England, Labour’s proposed £40bn tax rise – half of which would directly affect businesses – has intensified concerns among SMEs as they look to next year. Key issues worrying business leaders include inflation and rising costs (50%), economic instability within the UK (45%), and the wider impacts of Labour’s tax policies (37%).
Revenue challenges and workforce reductions
The recent Budget announcement has raised widespread concerns among UK businesses, with more than half (54%) citing the current political climate as the main driver of operational instability. 83% believe that the proposed changes to Labour’s budget policies and increases in the national minimum wage will negatively impact their revenues.
Worryingly, 76% of business leaders expect Labour’s tax policies to negatively impact workers’ wages, while 60% are considering cutting headcount and hiring freezes over the next year. These expected workforce adjustments reflect the increasing financial pressures on SMEs amid new fiscal measures.
Mixed feelings about workplace trends
Despite these challenges, there is still some optimism among business leaders. The data reveals that 62% believe Labour’s focus on improving workers’ rights could have a positive impact on employees’ mental health, providing a glimmer of hope in a turbulent future.
Companies in the UK are also open to adopting new trends in the workplace. Half of the leaders surveyed were willing to try a four-day working week, although 24% doubted it would work under Labour. Additionally, 61% support a return-to-office (RTO) model of at least three days a week, citing improved productivity (61%), enhanced collaboration (40%), and better professional development opportunities (38%) as key benefits. .
However, leaders are also aware of the potential downsides of enforcing office attendance. Half believe implementing RTO policies could hurt employee retention, and 26% fear it will create friction and lower morale in the workplace. Nearly a quarter are concerned about the impact on employees’ work-life balance and the potential for increased operational costs associated with the shift.
Focus on the roles of artificial intelligence and technology in recruitment plans
Despite economic pressures, more than half of UK businesses (55%) plan to expand their workforce in 2025, while 33% intend to maintain current staff levels. Hiring priorities indicate a surge in digital innovation, with nearly half (48%) focusing on IT and technical roles, and 24% targeting artificial intelligence (AI)-specific jobs.
The Fiverr UK Future Workforce Index 2024 reveals that companies are willing to offer 45% higher wages on average to candidates with AI experience, with more than 80% of leaders willing to pay a premium for these skills. In contrast, demand for creative and design roles remains weak, with only 19% of companies planning to hire in this field.
Advances in artificial intelligence are impacting hiring decisions, with 43% of companies citing this as a reason for scaling back hiring. Regulatory changes (34%) and budget constraints caused by the ongoing cost of living crisis (33%) are also important factors.
Freelancers are key to closing skills gaps
Freelancers are emerging as key contributors to the workforce, with 55% of companies already integrating freelancers into their teams. Nearly a third (32%) leverage their independent expertise in AI. Looking ahead, half of UK business leaders see freelancers as essential to achieving their goals in 2025, and 45% plan to increase their reliance on freelancers in the next year.
Hella Harrell, Director of International Growth at Fiverr, commented: “As the UK faces the challenges ahead, it is encouraging to see business leaders increasingly turning to freelancers to help address economic uncertainty and evolving workplace trends. With the acquisition of the four-day working week and policies Back to the Office Momentum It is clear that workplace flexibility is a top priority and as we approach 2025, we look forward to seeing freelancers play an even greater role in supporting businesses, not only in navigating uncertainty, but also in driving growth and innovation. Amidst ongoing challenges.
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