The report uncovers the reality that businesses want to do more with less and are striving to achieve business prosperity with significantly reduced budgets. Notably a large majority (85%) of UK businesses reported they have reduced their spending in the past 18 months, and despite this almost half (48%) say their business’s ambitions have increased. 

Economic growth has been a central focus for the UK in 2024, with both the current and previous governments recognising its importance as a top priority. However, over a quarter (27%) of UK businesses struggling to grow blame the recent change in government as one of the top three factors, following rising costs (60%) and macroeconomic factors (32%). The ongoing skills shortages (also 27%), and budget cuts (23%) follow close behind, showcasing the broad picture of the headwinds businesses are currently facing.

The long-term consequences of reactive cost cutting

These budget cuts and spending reductions are having long term effects, with nearly half of British businesses (47%) expressing regret over the extent of their cost-cutting measures. Companies that reduced spending the most over the past 12 months are now finding it the hardest to grow. Of those that reduced their spend, 51% regret reducing spend so drastically and 19% are now struggling to grow.

It’s not only spending decisions that businesses regret; recent layoffs are also slowing down companies' desired growth trajectory. Half of British (50%) businesses are finding the layoffs they carried out in the past 12 months have meant they’re now finding it hard to grow at the pace they want, due to skills shortages and the time taken to hire and get talent up to speed.

Business ambitions remain strong

There is light at the end of the tunnel, with 68% of UK business leaders feeling renewed optimism and “having their eyes firmly set on growth” now that the recession is behind them, but optimism is stretching businesses to do more with less. Despite these budget cuts, almost half of UK finance decision makers (48%) say their business ambitions have increased, and findings demonstrate where these ambitions and improvements need to lie – in collaboration. Over two thirds (71%) of leaders said if they’d had better insights into other departments and had greater collaboration they would have made better spending decisions, while 76% believe that collaboration between the finance team and other departments can make them a more financially successful company.

Pleo CEO and Co-Founder, Jeppe Rindom, commented on the results: “These findings signal a heightened attention on spend management as the real consequences of cutting costs come to the fore. Businesses are now confronting regrets and identifying remedies in real time, raising important questions about how to reignite growth across European markets.

“Organisations must break down silos and foster cross-departmental collaboration to improve spending decisions and build a more resilient, financially successful company. Nearly three quarters of UK business leaders believe that with insights into other departments and enhanced collaboration they would have made more informed spending decisions. Effective spend management strategies can facilitate this by connecting departments, through both digital and human collaboration, and thereby providing leaders with a comprehensive overview of their expenditures.”

Johanna Waara, Senior Vice President, Commercial Solutions Europe, Mastercard commented; “Businesses have traditionally been far slower to adopt new technologies for managing finances. But the web of complexities that previously defined the commercial payments landscape is becoming less tangled. Across the ecosystem, we’re seeing an increasing willingness from businesses to invest in new tech, to replace legacy systems, and to break down silos that once hindered their operations.

“Innovative solutions empower businesses to seamlessly digitise their organisation, enhancing efficiency and driving growth in today's digital economy.”

Pleo’s flagship event, Beyond, will be held in London on the 24th October, offering an in-depth discussion of the report findings. The event will focus on the importance of collaboration and explore how businesses can foster stronger interdepartmental cooperation to drive business success and sustainable growth.

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