Nearly three quarters of UK businesses passing on increased costs to customers
21 November 2025
UK businesses are increasingly cutting back on sustainability efforts as cost pressures intensify, with new research showing that 41% have delayed or reduced green initiatives and 33% have scaled back supplier due-diligence checks on labour standards and emissions. The findings, from a new Ivalua report, highlight a growing ESG backslide as companies face rising financial strain ahead of next week’s Budget.
The retreat from ESG commitments forms part of a broader push to contain costs across UK PLC. According to the report, Managing Cost Without Compromise: Sustaining Margins While Staying True To Values, 73% of businesses say lowering costs has become a greater priority during the past 12 months, even though 68% believe an overly narrow focus on cost-cutting will ultimately harm the business.
The pressure is already being passed on to the public: 71% of UK businesses say they have increased prices for customers. With possible tax rises looming, concerns are mounting that the next budget could trigger yet another wave of rising costs for households.
Ivalua’s survey of 300 UK supply chain and procurement decision-makers shows that cost-cutting is not only reshaping internal budgets but also destabilising supply chains. Key findings include:
• 55% of UK businesses say it’s only a matter of time before some key suppliers collapse due to cost pressures.
• 36% report that some suppliers have already gone out of business
• 19% have had suppliers cut ties with them
• 61% say the need to cut costs has driven them to work more closely with suppliers to reduce overall expenses.
Ian Thompson, VP of Northern Europe at Ivalua, warns that the cumulative strain is eroding business resilience:
“The future prosperity of UK businesses is at stake. With cost-cutting a top priority, 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 customers. After a year of persistent inflation, US tariff chaos, shifting trade policies, and ongoing conflicts, businesses don’t need further volatility — they need reassurance and support to help the UK grow.”
The FRC (Financial Reporting Council) recently found that only half of in-scope companies disclosed both targets and progress KPIs, with several providing no scenario analysis at all, indicating that many firms are still far from meeting baseline reporting expectations.
Despite the short-term retrenchment, organisations are seeking more sustainable approaches to long-term savings. Over half (52%) are collaborating directly with suppliers to lower production costs for both sides, while 45% are leveraging bulk discounts and 32% are using early-payment plans to reduce total purchase costs.
Thompson adds:
“Amid relentless cost pressures, the acid test for the next Budget is simple: will it lower costs without loading new burdens on UK firms and households? After years of uncertainty, businesses will naturally look to slash costs, but they must do so sustainably. Procurement has a central role by treating suppliers as peers. With sharper visibility across spend and suppliers, businesses can make smarter decisions, through bulk buys and early-payment savings, without weakening supply chains or ESG standards.”
To learn more, download the report, Managing Cost Without Compromise: Sustaining Margins While Staying True To Values, here.
