Cost of Doing Business Reaching a Crisis in the UK

By the Editorial Team · Thursday, September 17, 2026

British companies have experienced a 70 percent rise in operating costs over the past decade, largely driven by increased national insurance contributions and wage-related policies, according to the British Chamber of Commerce. This surge threatens business growth and has prompted calls for government reforms ahead of the October Budget to ease financial pressures and support entrepreneurship.

British companies are facing a significant increase in operating costs, with expenses rising by approximately 70 percent over the past decade, a leading industry group has reported. According to a new business cost calculator introduced by the British Chamber of Commerce (BCC), a typical firm employing 50 staff now spends roughly £827,000 more annually than in 2016, attributed directly to government policy decisions.

The BCC identified a substantial portion of this increase as a result of the national insurance contribution hike implemented by former Chancellor Rachel Reeves during her first budget in 2024. This policy, which aimed to boost government revenue by £25 billion annually, raised the employer contribution rate from 13.8 percent to 15 percent and lowered the salary threshold for contributions to £5,000. The chamber described this tax adjustment as a turning point, signaling what it calls a “cost of business crisis.”

David Bharier, deputy director of the BCC, emphasized that the rising financial pressures are deterring many firms from pursuing growth opportunities. Beyond national insurance, other factors contributing to higher operational costs include successive increases in the minimum wage and the introduction of pension auto-enrollment requirements.

It is important to note that the BCC’s calculations exclude external factors such as Brexit-related trade barriers, inflation, tariffs, and global geopolitical tensions, suggesting the real increase in business costs may be even higher.

The chamber has made its cost calculator publicly available to encourage dialogue with government officials before the Labour Party conference and the forthcoming Budget scheduled for October 28. Prime Minister Andy Burnham, since becoming Labour leader, has pledged to adopt a “pro-business” stance, with Chancellor John Healey highlighting the intention to provide companies with “breathing space” amid financial challenges.

Bharier stressed that future policies from Burnham and Healey should undergo a “growth delivery test,” ensuring they positively influence companies’ abilities to invest, innovate, or expand. However, experts caution that the upcoming Budget may present challenges, as the government seeks to restore fiscal flexibility through potential tax increases comparable in scale to those enacted last year.

Separately, Sir Richard Branson, founder of the Virgin Group, has called on policymakers to strengthen support for British entrepreneurs. Highlighting the difficulties in establishing new businesses, Branson urged the creation of an economic environment conducive to innovation and risk-taking. Research from Virgin’s charity, Virgin Startup, indicates many founders feel their concerns go unheard by Westminster. Branson underscored the broader societal benefits of nurturing entrepreneurship and the need for comprehensive support mechanisms to help new ventures thrive.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.