How the Cost of Living Crisis is Impacting UK Households
Throughout the UK, people are trying to find ways to cover their regular, basic household bills on falling real wages. Due to the ongoing cost-of-living crisis, people are finding it challenging to make ends meet, despite working hard and earning what many would consider to be a reasonable income. Explore more support strategies on our employee wellbeing resources page.
Ongoing Effects on Daily Life
Although the speed of inflation has slowed, the continued above-target rate—combined with rising energy costs and the high price of fuel and food—means that budgets continue to shrink. Household finances are being stretched to cover everyday expenses, and with high interest rates forecast to remain elevated for the rest of 2025, there’s little immediate relief in sight.
Even for people in regular employment, this has meant cutting back on essentials such as heating, groceries, transport, and family outings. According to the charity Trussell Trust, food bank use is rising among people in work, which drives home just how severe the cost of living crisis has become.
The Impact on UK Employers
If people in work are struggling to make ends meet, there is an inevitable impact on their employers. Employees experiencing financial hardships are likely to be less productive as worries outside of work are a distraction. They may also be looking to move for a higher salary or seek to negotiate a pay increase with their current employer, so there are obviously negative effects on the bottom line.
Employers should support their workforce during the cost of living crisis where they can, not only because it’s the right thing to do, but because it helps sustain morale, productivity, and retention. That said, many businesses are also facing financial pressures such as rising overheads, reduced consumer spending, or uncertain trading conditions.
Solutions Employers Can Offer During the Cost of Living Crisis
So, what could employers do to help? As is so often the case, good communication is a sensible starting place. Find out how employees are affected and what would be most valuable to your workforce.
Ways to ease the burden of the cost of living crisis:
- Financial education and general counselling
- Discount schemes
- Workplace foodbanks
- “Take what you need” essentials boxes
- Review effective payroll, salary, and benefits solutions on our payroll and benefits section
If you have employees who are experiencing difficulties due to the cost of living crisis, you can signpost them to government support via this link (https://www.gov.uk/cost-of-living) or support from debt charity Step Change (https://www.stepchange.org/how-we-help/rising-cost-of-living.aspx)
The Role of Employer of Record Services
Discover how Agility EOR’s Employer of Record services can simplify employer support and make a difference for your workforce.
Conclusion and Next Steps
While this crisis won’t last forever, the actions employers take now can make a big difference. Demonstrating care and compassion strengthens your organisation’s culture, boosts loyalty, and improves staff retention. Being a supportive employer today helps build a resilient workforce for tomorrow.
Contact us to discuss tailored solutions for supporting staff during the cost of living crisis: Get in touch.
