Rising hiring costs are ‘holding back Britain’s fastest growing firms’

Rising hiring costs and talent recruitment challenges are impeding Britain's fastest-growing companies, with three-quarters believing they could generate at least a 10% increase in jobs if expansion barriers were removed, according to research from Enterprise Britain. Surveying 423 "super scalers" – firms with over 50 employees and £5 million in annual revenue that have grown employment or sales by 20% or more annually for the past three years – the study found 93% of these leaders intend to increase their workforce within the next year.

Enterprise Britain co-founder Brent Hoberman urged the government to address this issue during the upcoming Budget, stating that it presents a "golden opportunity to back Britain’s super scalers, accelerate job creation, and spread prosperity more widely." Companies cited lengthy notice periods and non-compete clauses as factors making it difficult to quickly onboard experienced workers, contributing to skills shortages in rapidly expanding sectors.

The number of vacancies dropped to 702,000 between April and June 2023, the lowest since early 2021, and total payroll employment declined by 101,000 between July 2022 and July 2023. Currently, employers pay National Insurance at 15% on earnings above £5,000 annually, up from 13.8% before April 2025. However, Enterprise Britain argues that a significant number of companies are eager to hire more staff if barriers were lifted.

Of those surveyed, 75% indicated they would hire at least 10% more employees if obstacles were removed. The study highlights that a small group of businesses accounts for a substantial portion of Britain's job creation, with around 10,000 super scalers employing over five million people and generating more than 30% of all jobs since 2020.

Despite representing less than 1% of UK companies, these firms saw an average headcount increase of 46% between 2020 and 2024. However, the survey also revealed frustration among super scaler leaders, with 40% expressing reluctance to start a company in Britain and 71% citing the country's risk aversion as a hindrance to economic growth.

Other identified obstacles include domestic investment shortfalls and the burdens of regulation and bureaucracy, for which Enterprise Britain advocates reducing notice periods to one month, eliminating non-compete clauses, increasing incentives for pension funds to invest in British venture capital, and expediting the government's Scale-up Concierge service to assist growing businesses in navigating regulatory requirements.