Ivalua: 71% of UK businesses passed on rising costs to consumers

New research from Ivalua has found that more than four million UK businesses have increased prices for their customers in response to rising costs, with concerns mounting over the ripple effects of further tax hikes on both households and supply chains.

Cost pressures rising

Nearly three-quarters of UK firms have made cutting costs a higher priority over the past year. Seventy-one per cent of businesses confirmed they had passed on cost increases to customers. The consequences of these cost-control strategies are raising concerns about suppliers' financial health and the resilience of supply chains.

A significant number of businesses fear for the stability of their suppliers. Over half of UK companies believe that it is only a matter of time before some of their key suppliers are forced out of business due to unmanageable cost pressures. More than a third (36 per cent) have already seen some suppliers go out of business, while 19 per cent report that suppliers have severed ties with their organisations.

At the same time, 61 per cent of respondents stated that intensified cost-cutting efforts have led to closer collaboration with suppliers, as companies seek ways to reduce expenses across the board.

ESG initiatives delayed

There is evidence that cost controls are affecting corporate priorities beyond immediate financial results. Forty-one per cent of UK businesses have either cut back or put green initiatives on hold, while a third of respondents have postponed supplier due diligence checks related to labour standards and emissions. These actions come at a time when regulatory expectations around environmental, social, and governance (ESG) compliance are on the rise, increasing the risk of falling behind on sustainability commitments.

Businesses have adopted various approaches to manage their expenses, including working directly with suppliers to reduce production costs, leveraging bulk discounts, and introducing early payment plans. However, 68 per cent of decision-makers voiced concerns that an exclusive focus on cost reduction could harm their organisations in the long run.

The implications of these developments are being closely watched ahead of possible changes to tax policy, which could further increase operating costs for businesses of all sizes.

Budget uncertainty

"The future prosperity of UK businesses is at stake. With cost-cutting a top priority for UK firms, the Budget's biggest impact will come from measures that reduce input costs. But with potential tax rises, it's fair to wonder how much more UK PLC can take before they simply pass more costs on to their customers," said Ian Thompson, VP of Northern Europe, Ivalua. "After a year of persistent inflation raising the cost of raw materials, US tariff chaos and shifting trade policies, and conflicts in Europe and the Middle East, businesses don't need further cost volatility. They need reassurance and support to help the UK grow."