Cost of living crisis ranked as biggest threat to SMEs

Some 54% of UK SMEs have rated the cost of living crisis as the greatest threat to their continued operation, down 7% from 61% in 2024.

This is according to insurer Allianz’s latest Risk Barometer Survey, which revealed that despite the fall, the cost of living crisis still ranks as the number one concern for SMEs.

Changes to regulation and legislation, trade tariffs, cyber incidents and fiscal or tax constraints also ranked highly on the list of smaller firms’ self-reported concerns, highlighting the wide variety of challenges that they face.

Allianz said the concerns were largely an accurate reflection of the current threat landscape, with cyber incidents, business interruption, regulation, political risks and violence and new technologies all ranking highly on the firm’s Risk Barometer.

Easing crisis

Perceived risk varied across businesses, with smaller firms more concerned about the impact of legislation than their larger counterparts.

Alex Ktenidis, director of digital and ALP at Allianz UK, said: “The name cost of living crisis can sometimes mean the impact on businesses is overlooked, but when consumers have less disposable income and spending slows, that can hit SMEs hard.

“I’m cautiously optimistic to see that the squeeze of the cost of living crisis is easing for some business owners and looking at our research, it’s great to see SMEs clearly identifying the risks they face in today’s economy.

“Mitigating risks is what we do. We’re here to support business owners so they can focus on growth and innovation, providing peace of mind knowing that when disruptions occur, we’ll be there to support and help them get back on their feet quickly.”