Government survey reveals costs and taxes weighing on firms

Rising operating costs and taxation are among the most frequently identified challenges facing UK businesses with employees, according to a new official survey published by the Department for Business, Innovation, Science and Trade.

The first wave of the National Survey of Businesses is based on interviews with 1,019 senior representatives of private-sector businesses across the UK. Fieldwork was conducted by Ipsos between 22 June and 12 August 2026.

When asked about the main barriers likely to affect their businesses over the following 12 months, 25% identified high or rising costs generally, while 22% mentioned high taxes, National Insurance contributions or business rates.

The question permitted respondents to identify two or three challenges, so the percentages represent overlapping responses rather than separate groups that can be added together.

Other prominent concerns included changes in the UK’s economic performance, cited by 15%, and recruitment, retention or staff management, mentioned by 12%. Regulation or administrative requirements and declining demand within a sector or market were each identified by 10%.

The survey also asked respondents about growth expectations. Some 37% anticipated improved business performance over the next year, while 42% expected little change and 19% anticipated deterioration.

These findings measure expectations held by the surveyed businesses, rather than independently established predictions of sales, employment or national economic output.

Responses differed across types of business. Larger employers were more likely than small and medium-sized enterprises to cite international instability and changes to customs procedures as anticipated challenges. The report cautions that only 64 large businesses participated in the first wave, giving the estimates for that group a wider margin of uncertainty.

Businesses involved in exporting were also more likely to identify international instability or war as a concern than respondents overall. London-based businesses were more likely than average to cite the UK’s economic performance and inflation as possible constraints.

The survey provides evidence on policy awareness as well as commercial conditions. Among respondents in Great Britain, 66% reported having heard about recent or upcoming changes to employment rights, although awareness varied by individual reform.

Awareness of changes to Statutory Sick Pay was higher than recognition of some of the trade-union measures or the planned Fair Work Agency. The responses illustrate differences in familiarity with specific aspects of the employment reform programme, without establishing whether respondents’ businesses were legally compliant.

The findings also cover business characteristics and international trading activity. Some 27% of the businesses surveyed reported importing goods or services during the previous 12 months, making the results useful for examining how commercial conditions vary across different operations.

There are important limits to the sample. The research represents UK private-sector businesses that have at least one employee. Sole traders and other businesses without employees are excluded, along with organisations outside the defined private-sector population.

The 1,019 interviews comprised 840 telephone interviews and 179 completed online. The findings were weighted by business size and sector to reflect the defined population, and the report makes clear that the responses are self-reported.

The survey replaces the National Survey of Registered Businesses, but the department warns against direct statistical comparisons between the two exercises. Their sampling frames, weighting methods and interview approaches differ, meaning changes in reported percentages would not necessarily represent changes in underlying business conditions.

The new study is intended to provide a recurring evidence base, with further waves allowing comparisons under a more consistent methodology. The first publication establishes a baseline in which cost pressures dominate many respondents’ expectations, while employment and trading conditions differ across business sizes and sectors.