Latest results from the Decision Maker Panel survey – 2025 Q4

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Output price inflation

Firms in the Decision Maker Panel (DMP) reported that their own price growth rose slightly in the latest data after declining over the past year. In the three months to November, annual output price growth was 3.8%, up from 3.7% in the three months to August (Chart 1). This refers to prices charged by businesses across the whole economy, rather than just those selling directly to consumers. Expected price growth over the next year was 3.7% in the three months to November, unchanged from the three months to August; firms therefore expect own-price inflation to decrease by 0.1 percentage points over the next 12 months.

Price inflation remains higher for services than for goods. In the three months to November, own-price growth in the service sector was 4.2% (up from 4.0% in the three months to August), while in the goods sector it was 3.1% (down from 3.2%). Over the next year, firms in the service sector expect a slight fall in own-price inflation to 3.9%, whereas goods firms anticipate a small rise to 3.2%.

Chart 1: Firms expect little change in their own price inflation over the next 12 months

Realised and expected annual price inflation and change in inflation expected over the next year (a)

  • (a) Realised price growth results are based on the question: ‘Looking back, from 12 months ago to now, what was the approximate % change in the average price you charge, considering all products and services?’. Expected price growth results are based on the question: ‘Looking ahead, from now to 12 months from now, what approximate % change in your average price would you expect in each of the following scenarios: lowest, low, middle, high and highest?’ and respondents were asked to assign a probability to each scenario. The purple bars correspond to the difference between the orange and aqua lines. The chart shows three-month average data.

Employment growth

Annual employment growth among firms in the DMP has continued to decline and has turned negative in the most recent data. On a three-month average basis, firms reported that employment levels had fallen by 0.7% in November relative to a year ago, compared to a fall of 0.4% over the year to August (Chart 2). Annual employment growth is now the lowest it has been since the Covid pandemic.

Year-ahead firm employment growth expectations have also declined from 0.2% to -0.2% between the three months to August and the three months to November. Firms therefore expect little or no recovery in employment over the next 12 months.

Chart 2: Firms expect employment growth to remain weak

Realised and expected annual employment growth and change in employment growth over the next year (a)

A line chart showing realised and expected annual employment growth for firms from February 2017 to November 2025. The aqua line represents realised employment growth, which fell from -0.4% in August to -0.7% in November, marking the lowest level since the Covid pandemic. The orange line shows year-ahead expectations, declining from +0.2% to -0.2% over the same period. The purple bars indicate the expected change in employment growth over the next year, with firms anticipating little or no recovery in employment over the next 12 months.
  • (a) The results on employment growth are based on the questions: ‘How many people does your business currently employ (including part time), and how many people did you employ 12 months ago?’; and ‘Looking ahead, 12 months from now, how many employees would your business have in each of the following scenarios: lowest, low, middle, high, highest?’. For the questions on year-ahead expectations, respondents were then asked to assign a probability to each scenario. A point estimate is constructed by combining the five scenarios with the probabilities attached to them. The purple bars correspond to the difference between the orange and aqua lines. The chart shows three-month average data.

Wage growth

Annual wage growth has continued to decline. In the three months to November, firms reported average wage growth per employee of 4.5% (Chart 3). In the three months to October, official statistics reported by the Office for National Statistics showed that the annual growth in weekly regular pay (excluding bonuses and pay arrears) was 4.6% across the whole economy and 3.9% in the private sector. Wage growth in the DMP has now fallen by over 2 percentage points since its peak in 2023. In the three months to November, year-ahead expected wage growth among firms in the DMP was 3.8%, an increase of 0.2 percentage points relative to the three months to August. Firms therefore expect wage growth to decline by 0.7 percentage points over the next year.

Looking across industries, wage growth remained highest among providers of consumer-facing services (eg, accommodation and food, health, and recreational services). In the three months to November, wage growth in consumer-facing services was reported to be 5.5%, a fall of 0.1 percentage points from the three months to August. Over the year ahead, wage growth for firms in this sector was expected to fall to 4.3%. Goods firms reported wage growth of 4.1%, down 0.2 percentage points from August, and they expect a further fall of 0.6 percentage points to 3.5% over the next year. Reported wage growth for business-facing services (eg, finance and insurance) declined by 0.2 percentage points from 4.3% to 4.1%, with an expected drop of 0.5 percentage points to 3.6% in the year ahead.

Chart 3: Firms continue to expect a fall in wage growth over the year ahead

Annual and expected year-ahead wage growth (a)

A line chart showing annual own wage growth and expected annual own wage growth among firms in the DMP. In the three months to November 2025, annual own wage growth (aqua line) is about 4.5%, while expected annual own wage growth (orange line) is around 3.8%. The purple bars below the lines show expected change in wage growth over the next year, indicating firms anticipate further declines in wage growth.
  • (a) The results on wage growth are based on the questions: ‘Looking back, from 12 months ago to now, what was the approximate % change in your average wage per employee?’; and ‘Looking ahead, from now to 12 months from now, what approximate % change in your average wage per employee would you assign to each of the following scenarios: lowest, low, middle, high, highest?’. For the questions on year-ahead expectations, respondents were then asked to assign a probability to each scenario. A point estimate is constructed by combining the five scenarios with the probabilities attached to them. The purple bars correspond to the difference between the orange and aqua lines. The chart shows three-month average data.

Firms’ responses to increases in employer NICs and NLW

As announced in the 2024 Autumn Budget, in April 2025 the employer National Insurance contribution (NIC) rate was increased from 13.8% to 15%. Other changes lowered the secondary threshold to £5,000 per year from £9,100. Alongside these changes, the National Living Wage (NLW) for workers aged 21 and over increased to £12.21 per hour from April 2025, a 6.7% rise, alongside larger increases for younger age bands.

Between August and October, firms in the DMP were asked how they had responded to these changes to employer NICs, with respondents able to select multiple options (Chart 4). This question is a follow-up to a similar question about how firms expected to respond, asked between November 2024 and January 2025, soon after the changes were first announced.

Results from the August–October survey show how firms actually responded to the changes to NICs in April, compared with what they had anticipated between November 2024 and January 2025. Lowering profit margins remained the most common adjustment, reported by 64% of firms and broadly in line with earlier expectations of 62%. By contrast, fewer firms raised prices or reduced employee numbers than expected, with only 37% reporting price increases and 44% reducing staff compared with forecasts of 56% and 53%. The biggest difference was in wages. While 38% of firms had expected to lower wages, only 17% did so, suggesting that paying lower wages was far less common than originally predicted.

In addition, firms were asked about their margins of adjustment in response to the compulsory increases in NLW which came into effect in April 2025. Firms were again allowed to select more than one option. In contrast to firms’ responses to NICs, the most common margin of adjustment in response to the NLW increase was higher wages, which was reported by 49% of firms. 48% reported that profit margins were lower, 31% reported raising prices, and 29% said they had lowered employment.

Chart 4: Lower profit margins remain the most common adjustment to NICs changes

Firms’ expected responses to NICs increase (2024 Autumn Budget) versus reported responses to April 2025 NICs changes (a)

A bar chart comparing how firms responded to employer NIC changes between November 2024 to January 2025 and August 2025 to October 2025. The most common response in both periods was lowering profit margins (62% then 64%). Raising prices fell from 56% to 37%, and reducing employees declined from 53% to 44%. Lowering wages dropped sharply from 38% to 17%. Other rose slightly from 9% to 12%, and none of the above from 3% to 5%.
  • (a) The results on NICs margins of adjustment are based on the questions: ‘How do you expect your business to respond to the changes to employer National Insurance contributions announced in the November 2024 Budget?’ and ‘How has your business responded to the changes to employer National Insurance contributions that were implemented in April 2025?’. For these questions, respondents were asked to select all that applied from the following options: (i) Lower profit margins; (ii) Higher prices; (iii) Lower employees; (iv) Lower wages; (v) Other; (vi) None of the above. Firms were asked to answer relative to what they expect would otherwise have happened.

Wage growth by firms’ share of workers on NLW

Firms with greater NLW exposure have continued to report stronger wage growth than those that are less exposed. In the analysis that follows, firms are defined as having lower exposure to the NLW if 15% or fewer of their employees were paid at the NLW in 2024 (which was around a quarter of firms). Realised wage growth (measured as a three‑month moving average) peaked at 7.3% for high-exposure firms in December 2023, compared to a 6.9% peak for low‑exposure firms in July 2023. Since then, wage growth has slowed across both groups, but the differential has remained persistent. In the three months to November, realised wage growth stood at 5.1% for high-exposure firms: 1 percentage point higher than the 4.1% recorded for firms with lower exposure (Chart 5).

Expectations for wage growth over the next year show a similar trend, though the difference has narrowed. High-exposure firms expect wage growth of 4.3%, compared to 3.6% for low-exposure firms. The 2025 Autumn Budget subsequently confirmed that NLW will rise by 4.1% in April 2026, with larger increases for younger age bands, although the data presented in this box were collected before that announcement was officially made.

Chart 5: Firms with greater NLW exposure have continued to report stronger wage growth than those less exposed

Realised and expected annual wage growth by NLW exposure (a)

A line chart comparing realised and expected wage growth for firms with high NLW exposure (>15% of employees at NLW, aqua line) and low exposure (≤15%, orange line) from May 2022 to November 2026. Both lines rise through 2022, peaking in late 2023: high-exposure firms reach 7.3% in December 2023, while low-exposure firms peak near 6.9% in July 2023. After these peaks, both decline steadily through 2024–25. In November 2025, realised wage growth is 5.1% for high exposure and 4.1% for low exposure firms. The diamond markers show year-ahead expectations, with high-exposure firms expecting 4.3% and low-exposure firms around 3.6%, showing a narrowing gap. The chart illustrates persistent higher wage growth for firms more exposed to NLW, with both realised and expected growth trending downward over time.
  • (a) The results on wage growth are based on the questions: ‘Looking back, from 12 months ago to now, what was the approximate % change in your average wage per employee?’; and ‘Looking ahead, from now to 12 months from now, what approximate % change in your average wage per employee would you assign to each of the following scenarios: lowest, low, middle, high, highest?’. For the questions on year-ahead expectations, respondents were then asked to assign a probability to each scenario. Breaking down into NLW, the firms, the following question was used: ‘Approximately, what percentage of your employees were paid at the compulsory National Living Wage/National Minimum Wage in 2024?’. The chart shows three-month average data.

Employment growth by firms adjusting workforce in response to NICs increase

While increases in the NLW have supported wage growth, employment has by contrast weakened. Some firms report that they have lowered employment in response to the increase in the NLW, but a larger proportion of firms report reducing employment as a response to changes in employer NICs which came into effect in April 2025. Chart 6 shows that employment growth has weakened notably for firms that cut staff in response to April’s rise in NICs, while firms that did not adjust employment have seen relatively stable growth. Realised employment growth has remained steady at around 2.1% in the three months to November for firms who report that they did not reduce employee numbers as a response to the NICs increase. In contrast, employment growth has fallen sharply for firms that did select this option, with employment growth declining to -4.5% over the same period (Chart 6). The gap between these two groups has therefore widened to 6.6 percentage points, up from 2.9 percentage points in November 2024. This suggests that the increase in employer NICs is an important explanation for the slowing in overall employment growth, although NICs may also not be the only explanation for these differences.

There may also be some further adjustment of employment still to come. A gap exists in year-ahead employment growth expectations between the two groups, although it is narrower than for realised employment growth. Firms that have not adjusted their workforce in response to NICs anticipate employment growth of around 1.3% over the next year, whereas those that have reduced staff expect employment to fall by a further 2.4%.

Chart 6: Employment growth has weakened notably for firms that cut staff in response to April’s rise in employer NICs

Realised and expected year-ahead employment growth by lower employment selected/not selected (a)

A line chart comparing employment growth for firms that reduced staff after the April 2025 NICs rise (orange line) and those that did not (aqua line) from May 2022 to September 2026. The orange line falls sharply, reaching -4.5% by November 2025, while the aqua line stays around 2%. One year ahead expectations show a gap narrowing slightly: firms that kept staff expect +1.3% growth, while those that cut staff expect -2.4%. The chart highlights a widening gap in realised growth and persistent negative outlook for firms reducing employment due to NICs.
  • (a) The results on employment growth are based on the questions: ‘How many people does your business currently employ (including part-time), and how many people did you employ 12 months ago?’; and ‘Looking ahead, 12 months from now, how many employees would your business have in each of the following scenarios: lowest, low, middle, high, highest?’. Breaking down into NICs, the following question was used: ‘How has your business responded to the changes to employer National Insurance contributions that were implemented in April 2025?’. For these questions, respondents were asked to select all that applied from the following options: (i) Lower profit margins; (ii) Higher prices; (iii) Lower employees; (iv) Lower wages; (v) Other; (vi) None of the above. Firms were asked to answer relative to what they expect would otherwise have happened.

Methodology

The DMP consists of the chief financial officers of small, medium, and large UK businesses operating in a broad range of industries.

We survey panel members to monitor developments in the UK economy and to track businesses’ views on them. This work complements the intelligence gathered by our Agents.

This note is a summary of surveys conducted with DMP members up to November 2025. The November survey was in the field between 7 and 21 November. The November survey received 2,142 responses.

Monthly data from the November survey for a limited number of DMP series was published on 4 December 2025. Aggregate level data for all survey questions are published on a quarterly basis. Data from the August to October surveys were released on 6 November. More information can also be found on the DMP website.

The panel was set up in August 2016. It is run by the Bank of England in collaboration with King’s College London and the University of Nottingham. It was designed to be representative of the population of UK businesses. All results are weighted using employment data. Refer to Bunn et al (2024) for more details.

The DMP receives funding from the Economic and Social Research Council.

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