𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

A new survey among small and medium-sized businesses (SMEs) has found that a huge majority expect to be raising prices over the next year, with optimism split on whether they will survive or thrive amid challenging economic conditions.

Business owners have been hit this year by raised National Insurance Contributions and a higher minimum wage, while a new pensions review could ultimately see them have to contribute more in the future as well.

Meanwhile inflation from raw materials and higher energy costs have meant that their own prices have been on the increase, contributing to overall UK inflation levels. In addition, tariff uncertainty impacted those exporting to the US in the earlier part of the year before a trade deal was agreed.

It all amounts to a difficult backdrop for companies this year, with SMEs typically harder-hit than larger businesses when consumer spending drops.

Unsurprisingly, that means shoppers can expect to see another price hike coming in many places across the rest of 2025 and beyond, as detailed in a report by Simply Business, an insurance firm representing close to a million SMEs across the UK.

A massive three-quarters (74 per cent) of more than 2,300 business owners surveyed said they’ll need to raise prices in the coming year, an increase from the two-thirds who said so in 2024. More than three in five (63 per cent) businesses anticipate raising prices up to 20 per cent, but only 2 per cent expect prices to decrease in the coming 12 months.

Despite those price increases, the businesses are not making more money.

Nearly half (44 per cent) see profits decreasing in 2025, with fewer than two in five (17 per cent) expecting to see a rise in profits. Almost as many (16 per cent) say their profits will go down by more than a quarter.

High street at stake

An ongoing trend has been concerns about the long term future of the UK high street.

Smaller businesses are increasingly despondent about its future, with a huge 82 per cent of SMEs saying their local high street has declined, 74 per cent saying shopper numbers are down and nearly two-thirds – 63 per cent – believing the notion of the national high street will be obsolete within ten years.

As a result of this, more than a third of small business owners (37 per cent) are considering selling up or closing their doors this year for good.

Government support is needed, the majority feel, to ensure a turnaround. Fewer ‘chains’ and more independent shops are seen as the best way to aid a reversal of fortunes, with free or cheap parking and more events of wider options of things to do also high on the list.

The survey further revealed a quarter of small business owners expected to have to use their savings to prop up their business – yet despite these apparent hardships, more than half, 57 per cent, still feel optimism about their business’ future.

That is backed up by figures showing the number of new businesses registered in the first three months of this year was up almost 3 per cent compared to the same time last year.

Small businesses contribute more than £2.8tn in turnover to the economy and account for more than half of the UK’s private sector employment.