Firms Warn About Impact of Chancellor's NICs and Employment Costs

Hiring Stays Stagnant Amid NI Surge

In Q2, the British Chambers of Commerce (BCC) Insight Unit’s Quarterly Recruitment Outlook (QRO) painted a surprisingly calm picture: companies were holding off on big hiring moves as they wrestled with that new National Insurance (NI) hike. Think of it as a business “pause button” – but don’t worry, it’s not a full‑stop.

Did Anyone Still Try to Bring On New Talent?

55 % of firms took a shot at recruiting over the past three months – pretty much a mirror of the 54 % in Q1.
Out of those, 73 % reported hiring head‑winds. That’s a mild lift from the 76 % tug‑ing at the recruitment rope in Q1.

Where the Recruiting Struggle Is Strongest

Transport & Logistics – 80 % hit a hiring brake (vs 82 % in Q1).
Construction & Engineering – 77 % experienced hiccups (down from 83 % in Q1).

Staffing Numbers: The Great Stasis

Most businesses kept their workforce levels steady in Q2.

60 % said employee numbers stayed flat.
23 % (up from 20 % in Q1) actually added staff.
Looking ahead, optimism is wobbling: only 25 % expect a workforce boost in the next three months, down from 27 % last quarter.

The Biggest Salary Strings: Labour Costs

Labour costs continue to weight on the business budget.

73 % flag labour as a major pressure point (unchanged from Q1).
Situation is acute in Transport & Logistics (88 %) and Hospitality (83 %).

Training: Treading Water

Only a handful of firms increased training spend.

23 % raised their training budget (just nudged up from 22 % in Q1).
The majority (59 %) didn’t invest more in training over the last quarter.

Research Snapshot

Data come from a fieldwork run between 12 May and 9 June, with over 4,500 UK businesses (93 % SMEs) answering the online survey.

Bottom line: With the NI hike still in effect, businesses are playing the “wait and see” card – keeping hiring, training, and expansion on pause and hoping the next quarter brings better news. Until then, the big takeaway for firms is: stay firm, stay flexible, and maybe invest a little more in training – because you never know when the next talent wave might hit!

What businesses are warning

Wage Worries: Small Businesses Feeling the Heat from Rising NICs

Mid‑Sized Professional Services in Liverpool

“We’re in the same boat, but the tide’s higher now. The NIC hike has turned our wage bill into a real beast, and we’ve got to juggle that without passing the extra cost onto our clients. That’s left us breathing down recruitment and growth plans.”

Micro Manufacturing Firm in East Midlands

“The government says it’s looking out for working folks, yet the reality is businesses are splashing money out on ever‑rising costs. Those costs in turn are forcing our hiring decisions down a harder path.”

Small Public‑Sector Firm in Suffolk

“The surge in Employer’s National Insurance didn’t exactly help our case. It stifled staff training and let us tuck new hires off the radar.”

Small Hospitality Firm in Dorset

“Wage costs are a real threat to little businesses. With a tight cash pantry, we’re forced to trim staff numbers or hours to keep the bills grounded.”

Jane Gratton, Deputy Director of Public Policy – BCC

“Even though this is early days, firms are already sounding the alarm on the impact of NICs and other employment costs. A big shock could loom on the horizon.”

“Higher labour costs coupled with ongoing skill shortages are turning recruitment into a real uphill climb for SMEs.”

“Companies are adjusting budgets—whether that means hiring fewer people, cutting replacement costs, or pulling back on training—so there’s no doubt the rising employer costs are throwing a wrench in the works.”

“Growth and productivity are stalled by persistent skill gaps, especially in transport, logistics, and construction.”

“We need urgent action: a nimble, responsive training system, better support for people facing work barriers, and a firm promise that business taxes won’t climb any higher.”

“Our Blueprint for Growth lays out clear policy steps that, if put in place, could straighten out the recruitment headache and put businesses firmly in the driver’s seat for supercharging the economy.”