Business

Small and medium-sized enterprises (SMEs) across the UK are showing remarkable resilience by prioritising employee welfare and environmental sustainability, despite mounting economic pressures, according to new research by Purbeck Insurance Services.

As inflation and the cost of living continue to strain households and businesses alike, over half (51%) of SMEs have stepped up to support their staff. The survey by Purbeck – the UK’s only provider of personal guarantee insurance – found that nearly half of these businesses have either reviewed salaries or issued cost of living bonuses to help employees navigate ongoing financial challenges.

This employee-first approach comes at a time when only a third of Britons describe themselves as financially comfortable, according to recent YouGov data. Yet, despite operating in a tough economic environment themselves, UK SMEs are doubling down on staff welfare — recognising the value of retaining loyal, motivated teams.

Todd Davison, Managing Director at Purbeck Insurance Services, said: “It’s great to see that many UK small businesses are taking practical steps towards decarbonisation, while also looking after their employees, even though they are facing their own fiscal challenges. Doing the right thing does, however, often come at a cost.”

Alongside their people-first mindset, SMEs are also taking environmental responsibility seriously. Ahead of World Environment Day on 5 June, Purbeck’s research revealed that nearly two-thirds (64%) of SMEs are implementing measures to reduce their carbon footprint.

Sustainability efforts were most prevalent among businesses run by younger leaders aged 25-34, and geographically strongest in the West Midlands. In contrast, firms in the North East were the least likely to be introducing environmental policies.

Larger SMEs (with 100-249 employees) are leading the way on green initiatives, with actions ranging from reducing business waste (adopted by 45%) to launching in-house recycling schemes. Notably, one in three SMEs tackling environmental concerns is encouraging sustainable procurement practices across their supply chains, demonstrating a growing awareness of embedded sustainability at an operational level.

While green action and employee support both carry costs, Purbeck’s report suggests that good business practices are translating into strong staff loyalty. The smallest firms are seeing the best retention rates, with 40% of businesses with fewer than 10 employees describing their employee retention as ‘very good’ — a higher proportion than their larger counterparts.

Davison added: “With the right financial backing, even the smallest businesses can play a meaningful role in working towards net zero without a negative impact on their cashflow or employee wellbeing. That’s why it’s vital to protect owners from risk if a loan is required — personal guarantee insurance helps to de-risk borrowing and enables SMEs to focus on their long-term goals with confidence.”

The findings underline how UK SMEs — often referred to as the backbone of the economy — are doing more than just surviving; they’re helping drive social and environmental change from the ground up. As the push toward net zero gathers pace and workers continue to feel the pinch, this dual focus on sustainability and staff support may prove critical in shaping a more resilient, responsible economy.

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UK SMEs show resilience by supporting staff and embracing sustainability

Almost half of UK employers have seen increased staff turnover as a result of delaying pay rises for professionals and white-collar workers, according to new research from global talent solutions consultancy Robert Walters.

In a survey of UK business leaders, 47% admitted that postponed or reduced salary reviews had led to higher employee attrition, as organisations struggle to balance cost controls with retention. The findings come amid a broader climate of economic uncertainty, with many companies prioritising the management of overheads in response to shifting market conditions.

Chris Eldridge, CEO of Robert Walters UK & Ireland, acknowledged the pressures that employers are facing but warned of the long-term costs. “Businesses are under immense pressure to keep costs down, and for many, salary increases just haven’t been feasible this year. In fact, 64% of business leaders cited budget constraints and business performance as the primary reasons for holding off on pay reviews,” he said.

“However, our research shows that these decisions are not without consequence. Whether it’s higher turnover or a gradual drop in motivation, companies are starting to feel the effects.”

The data highlights a growing gap between employer actions and employee expectations. Among UK employees who did not receive a pay rise this year, 63% are now actively looking for a new job. Even among those who did receive an increase, 61% said it fell short of their expectations.

This disconnect is contributing to a wider sense of disengagement. Over one in three employers (36%) reported lower morale and reduced motivation in teams following delayed pay increases — a challenge that is particularly difficult to navigate in a competitive labour market.

Chris Eldridge added: “There’s a clear message here: even if employees understand the business pressures, unmet expectations are still pushing them to reconsider their options. With AI-driven tools simplifying the job application process, professionals can now explore new roles with unprecedented ease.”

Sinead Hourigan, Global Head of CX, Commercial and Customer Experience at Robert Walters, said companies should prepare for a rise in salary discussions in mid-year reviews, especially among workers who feel overlooked.

“This is where salary benchmarking and market insights become vital. Employers need to go into conversations armed with credible data — not just to justify pay decisions but to show fairness and manage expectations effectively.”

To support employers in this, the newly released Robert Walters 2025 Salary Survey offers comprehensive insight into current market rates, pay trends and hiring outlooks across a range of professional sectors. The guide is designed to help businesses conduct evidence-based, transparent conversations about pay.

With many businesses constrained on what they can offer in terms of compensation, Robert Walters is urging employers to think beyond salary alone. The firm’s research suggests that career development, flexible working, and internal mobility opportunities are increasingly important to professionals weighing their options.

“When pay rises aren’t on the table, culture and communication matter more than ever,” said Sinead Hourigan. “We’re seeing more employers ask how they can retain their best people creatively and thoughtfully. The organisations that succeed will be those that balance cost control with genuine investment in employee experience.”

As the cost of living remains high and employees continue to reassess their priorities, the message for employers is clear: inertia on pay and progression risks triggering costly talent losses — and recovering that ground will take more than budget alone.

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Delaying Pay Rises Is Driving Staff Turnover, Say Nearly Half of UK Employers

Business sentiment in the UK private sector has slumped to its weakest level in nearly three years, as rising wage costs and mounting global trade concerns weigh heavily on economic outlook.

The latest “growth indicator” from the Confederation of British Industry (CBI) reveals that a net balance of 30 per cent of companies expect a decline in activity over the next three months—a further deterioration from the -26 per cent recorded in May, and the lowest figure since September 2022.

“There is little sign of summer cheer in our surveys,” said Alpesh Paleja, deputy chief economist at the CBI. “Private sector activity is expected to remain subdued over the next three months. Our surveys were already pointing to weaker momentum than official data at the start of this year and this sluggishness looks to have continued.”

The gloomy outlook spans every major segment of the economy. In services, a net balance of -32 per cent of firms forecast a drop in volumes, with business and professional services down -29 per cent, and consumer services even worse at -43 per cent. Distribution sales are projected to decline by -39 per cent, the weakest reading in the sector since September 2022. Manufacturing output is also expected to shrink, with a balance of -14 per cent.

Businesses cited a mix of domestic and global pressures behind the downturn in sentiment. On the home front, the effects of the spring budget continue to ripple through the economy. In April, Chancellor Rachel Reeves raised employer National Insurance contributions (NICs) from 13.8 per cent to 15 per cent, while also lowering the earnings threshold for those contributions. At the same time, the national living wage was increased, hitting labour-intensive industries particularly hard.

“Firms highlight numerous headwinds,” said Paleja. “These include the continued impact of higher employer NICs and the national living wage hike on their costs and operations; further uncertainty from developments in the global trade landscape; compounded by a general sense of weak demand at home.”

Internationally, UK businesses are facing growing anxiety about trade disruptions, particularly in light of newly announced tariffs by President Trump, which threaten to raise costs and complicate supply chains. Manufacturing and distribution firms, already battling margin pressures, are particularly exposed to shifts in global trade policy.

The CBI’s warning comes as other recent data paints a similarly challenging picture. A separate industry survey released this week revealed that nearly one in three hospitality businesses are now operating at a loss, following a surge in costs linked to recent tax hikes. More than 60 per cent of hospitality employers have already cut jobs or hours, and over half have cancelled investment plans.

The CBI called on the government to act swiftly to shore up business confidence and stem further economic drag. Key policy asks include a reformed business rates system, more flexibility around the apprenticeship levy, new incentives for occupational health, and broader support for innovation and investment.

“Against this backdrop of uncertainty, private sector firms are looking to the government for decisive action,” said Paleja. “Without intervention, the risk is that this period of low confidence and weak demand drags on longer than it needs to.”

The CBI’s monthly growth indicator, based on responses from 650 businesses across manufacturing, retail, and services, reflects sentiment between April 25 and May 14. The results follow a string of mixed economic indicators, with official GDP growth for Q1 showing a modest 0.7 per cent rebound—but with little sign of sustained momentum heading into the summer.

With inflation easing but business costs still elevated, firms now face a critical period. Many will be watching closely for signs that ministers are prepared to listen—and respond—to growing calls for targeted, business-friendly reforms.

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Private sector confidence hits lowest level since 2022 as wage and trade pressures mount

The UK’s fast-growing crypto market has reached a major inflection point as IG Group, one of the country’s biggest online trading platforms, becomes the first London-listed company to offer direct cryptocurrency trading to retail investors.

From this week, IG clients in the UK will be able to buy and sell 38 individual digital tokens—including bitcoin, ethereum, and the meme-inspired dogwifhat—through a new partnership with digital asset platform Uphold. The launch marks a significant milestone not just for IG, but also for the broader integration of crypto into the regulated financial mainstream.

Michael Healy, IG Group’s UK managing director, described the move as “a major milestone in the UK’s crypto journey,” noting that demand from customers has reached “a tipping point”.

“Crypto is no longer a fringe asset class,” Healy said. “Our clients want secure, reliable access to digital tokens from a trusted provider—and as a UK-listed, regulated company, we’re ideally placed to meet that need.”

Though crypto trading is already offered by private fintechs such as Revolut, IG is the first company on the London Stock Exchange to formally enter the space. Healy believes this brings a new level of credibility to an industry that has long struggled with regulatory scepticism and an image problem rooted in volatility, fraud, and scandal.

The launch comes amid rising adoption of crypto in the UK. According to the Financial Conduct Authority (FCA), 12 per cent of UK adults now hold some form of cryptocurrency—up from just 4.4 per cent in 2021.

IG’s service will offer access to a diverse portfolio of tokens through Uphold, which will act as custodian. However, it’s worth noting that Uphold is not covered by the Financial Services Compensation Scheme, so retail clients won’t benefit from the protections typically afforded to more traditional financial products.

Still, for IG—a FTSE 250 firm best known for leveraged derivatives and stockbroking—the move signals a broader shift into long-term investing and digital asset management. “We’re expanding our product offering, and crypto is clearly a key part of where the future is headed,” Healy said.

The timing is notable. In the UK, Chancellor Rachel Reeves has recently reaffirmed the government’s intent to introduce “robust rules around crypto” as part of a broader strategy to enhance financial innovation and protect consumers. In the US, former President Donald Trump’s pro-crypto rhetoric has fuelled expectations of a friendlier regulatory environment should he secure a return to office. This contrasts with President Biden’s tougher stance and recent crackdowns on crypto exchanges and products.

While digital assets remain polarising—particularly among regulators wary of their use in money laundering and scams—their underlying blockchain technology and decentralised nature continue to attract institutional interest.

Crypto advocates say mainstream adoption by large financial institutions will help clean up the sector’s “Wild West” image, particularly following high-profile failures such as the collapse of FTX in 2022 and the fraud conviction of its founder Sam Bankman-Fried. IG’s entry, with its reputation for transparency and compliance, could serve as a turning point for retail confidence in crypto.

That said, the FCA remains cautious. It has repeatedly warned that cryptocurrencies are highly speculative and carry a significant risk of loss. There is no inherent value in most digital tokens, and the market remains extremely volatile.

Even so, IG’s move signals a shift in sentiment. By marrying the accessibility of retail crypto with the oversight and infrastructure of a listed company, the firm is positioning itself at the forefront of a new chapter in UK finance—one where digital assets are no longer peripheral but part of a credible, regulated investment landscape.

As the UK finalises its regulatory rulebook for crypto in the coming months, IG’s decision to embrace digital tokens could become a blueprint for other listed financial firms looking to engage with the asset class—bringing further legitimacy, and perhaps a little less chaos, to a sector long defined by both rapid growth and rampant uncertainty.

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IG Group becomes first UK-listed firm to offer retail crypto trading

At her spring budget, Chancellor Rachel Reeves outlined an ambitious vision: to make Britain a “defence industrial superpower”.

In doing so, she joined a growing wave of European leaders rethinking their military budgets not just through the lens of national security, but as tools for economic growth. As war returns to Europe and global power balances shift, defence spending is being recast—from fiscal burden to potential economic catalyst.

It’s not just rhetoric. Reeves has earmarked an increase in the UK’s defence budget from 2.3% of GDP to 2.5% by 2027-28, equivalent to £6–8 billion in additional spending. Longer term, she wants to push that figure to 3%, which would mean another £17 billion by the end of the decade. Her stated aim: more UK-made drones, AI defence systems, and military tech incubated in British start-ups. The message is clear—this isn’t just about buying bullets, it’s about building economic momentum.

Across Europe, the same thinking is taking hold. Germany has set up a massive off-balance-sheet defence fund and is exempting military spending from its fiscal rules. The European Commission is letting member states borrow for defence outside of deficit constraints and is finalising a €150 billion loan facility to fund joint security projects. If the EU once championed the welfare state, it is now making peace with the warfare state—ushering in what some have dubbed a new era of “military Keynesianism”.

Traditionally, defence spending has had a limited impact on long-term productivity. Military expenditure in Europe has historically been a poor driver of economic expansion. A European Commission study found no clear growth effects from defence spending across 15 countries over five decades. Even in the UK, while real-terms defence spending has crept up since the 1980s, employment in the sector has halved. Today, only around 0.9% of UK jobs are supported by Ministry of Defence contracts.

Yet proponents argue that how governments spend matters more than how much. Paolo Surico, professor at London Business School and an advisor to the Treasury, believes defence spending can have a significant economic multiplier—if focused on research and innovation. He estimates that traditional military outlays generate a modest return of £0.60–£1.00 per £1 spent over four years. But when targeted at R&D and emerging technologies, that multiplier could rise to 2:1 over the long term.

Examples abound. The internet and GPS both trace their roots to U.S. defence research projects. The hope is that investment in autonomous drones, quantum radar, and cyber capabilities could deliver similar spillovers. Reeves has signalled support for this approach, stating that she wants the benefits of defence spending to be felt “across the whole country”, including in regional tech clusters.

But sceptics say the UK risks falling between two stools. Khem Rogaly of the Common Wealth think tank warns that Labour’s current approach resembles “military austerity”—funding rearmament by cutting back on other industrial investment, such as the National Wealth Fund. Others note that with around 50% of the UK’s defence procurement coming from overseas, and as much as 75% for EU countries, it’s often American firms, not British ones, that benefit most from Europe’s rearmament.

Then there’s the question of financing. Unlike the EU, which is considering joint debt issuance to fund defence, the UK remains bound by strict fiscal rules. That limits the ability to borrow and risks crowding out other public investment.

Still, some economists argue that defence spending could unlock broader EU integration. With 15 member states already planning to use Brussels’ relaxed fiscal rules to boost military budgets, there is growing support for a permanent EU-level fiscal policy to fund shared security needs—potentially marking a “second ‘whatever it takes’ moment”, according to Vanguard economist Shaan Raithatha.

For the UK, though, the path is narrower. If Labour is serious about building an industrial strategy around defence, it must commit to more than just rebalancing budgets. It must create ecosystems of innovation, secure domestic supply chains, and avoid the temptation to simply increase troop numbers or purchase imported kit.

There are big questions about whether defence spending will deliver meaningful economic returns. But with geopolitical pressures rising and growth levers limited, Reeves may feel she has little choice but to try. The stakes, after all, are not just about job creation—but the future of national security, industrial resilience, and Britain’s place in a new global order.

Read more:
Can the UK economy get more bang from higher defence spending?

A third of the UK’s pubs, bars, restaurants and hotels are now operating at a loss following a wave of government-imposed tax increases that came into effect in April, according to a new industry survey.

The research, conducted by UKHospitality, the British Beer & Pub Association, the British Institute of Innkeeping and Hospitality Ulster, reveals that nearly one in three hospitality firms is losing money—raising concerns about the future viability of a sector that contributes over £26 billion to the UK economy and supports close to a million jobs.

The stark findings come after a series of fiscal changes introduced in the Chancellor’s spring budget. Most notably, employer National Insurance contributions (NICs) were raised from 13.8 per cent to 15 per cent, while the earnings threshold triggering NIC payments was reduced from £9,100 to £5,000. Business rates also rose for many premises, adding further financial strain.

According to the survey, which polled hundreds of businesses last month, 60 per cent of hospitality operators have already cut jobs and nearly two-thirds have slashed staff hours. More than half said they have been forced to cancel planned investments, and 76 per cent have increased prices in an attempt to remain solvent.

The total cost impact of these changes is estimated at £3.4 billion across the sector. Industry leaders warn that the sudden hike represents the sharpest quarterly increase in operating costs in years—and risks accelerating the closure of local pubs, hotels and restaurants that are still recovering from the pandemic and grappling with broader inflationary pressures.

In a joint statement, the trade associations warned: “The government seems to be setting itself up to miss its own targets with these most recent cost hikes for the hospitality sector.

“Jobs are being lost, livelihoods are under threat, communities are set to lose precious assets, and consumers are experiencing price rises when wallets are already feeling the pinch.”

The groups are calling for an urgent reversal of the NIC changes, faster reform of the business rates system, and a long-campaigned-for reduction in VAT for the hospitality industry—an intervention they argue would ease pressure on operators, reduce prices for customers, and stimulate job creation and investment.

Senior industry figures have also written to Chancellor Rachel Reeves warning that the NIC changes are regressive and disproportionately affect low earners. Some roles, particularly those close to the minimum wage, could become economically unviable as a result, they claim.

Tim Martin, chairman of JD Wetherspoon, has been among the most vocal critics of the government’s policy direction. He said his pub chain faces an additional £60 million in labour-related costs this year alone due to the increase in employers’ NICs and the April hike in the minimum wage.

Despite mounting pressure, the Treasury defended the government’s position. A spokesperson said: “We are a pro-business government and we know the vital importance of the hospitality sector to local communities and the wider economy. That’s why we’re supporting them with business rates relief, cutting duty on draught pints, capping corporation tax and protecting the smallest businesses from the employer National Insurance rise, which is helping to fund the NHS.”

While the government argues that broader measures will support hospitality through the transition, many operators say the current approach is short-sighted and risks undermining a sector that has long been a major contributor to UK jobs, growth and high street vitality.

Without meaningful intervention, trade bodies warn, more businesses will face closure in the coming months—threatening not just individual livelihoods, but the cultural and economic fabric of communities across the country.

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A third of UK hospitality businesses ‘operating at a loss’ after April tax hikes