Businesses across the UK’s chemical supply chain are facing ongoing pressures from rising employment costs and challenging trading conditions, according to the Chemical Business Association’s (CBA) latest Quarterly Supply Chain Trends Survey.
The survey, which has provided valuable insight into the health of the sector for more than 14 years, is distributed to the Association’s extensive membership and gathers responses from manufacturers and distributors, transport and logistics companies, and service providers from across the UK’s chemical supply chain.
The Q3 2026 findings highlight a sector increasingly focused on maintaining existing operations and employment levels, rather than investing in growth or recruitment. Rising employment costs, subdued sales expectations, logistics disruption and regulatory uncertainty are combining to place further pressure on businesses, particularly small and medium-sized enterprises (SMEs).
According to CBA chief executive Tim Doggett, employment is emerging as an area of concern. “The recent Budget confirmed a 3.9% increase in the National Living Wage and National Minimum Wage from April 2027, alongside £100 million of funding over two years to expand local apprenticeship services and help connect young people with businesses.
“While the additional support for apprenticeships is welcome, businesses are already facing the cumulative impact of higher National Insurance contributions, changing employment rights and rising wage costs.
“For smaller businesses in particular, the financial and administrative demands of recruitment and onboarding can make taking on new employees, including apprentices, increasingly difficult.
“Although the chemical industry recognises the importance of developing the next generation of talent, there are limits to what individual businesses can achieve without a supportive policy and economic environment.”
The CBA’s Generation STEAM initiative is one example of the industry’s commitment to attracting young people and developing the skills needed for the future. However, according to Doggett, industry efforts to encourage employment, invest in training and create opportunities must be supported by Government if they are to be sustainable.
““Businesses understand the importance of investing in people, developing skills and creating opportunities for the next generation. However, they need to be in a position to take on apprentices, provide training and support new employees. If the cost and complexity of employing apprentices continue to increase, there is a real risk that businesses will be discouraged from recruiting and investing in them altogether.”
The survey findings reflect this. More than half (53%) of respondents expect employment levels to remain unchanged during the next quarter, while one in five (20%) anticipate having to make cuts. This suggests that many businesses are concentrating on retaining their existing workforce, with limited scope for additional recruitment.
However, employment is just one part of a wider picture of cost pressures and uncertainty. According to the survey results, 39% of respondents expect sales to decline during Q4, highlighting ongoing uncertainty around demand and the prospects for growth.
Logistics presents further challenges. Escalating shipping costs were cited by 92% of respondents, while one in three reported difficulties with road haulage capacity in the UK and almost one in four experienced similar problems within the EU. For businesses reliant on the efficient movement of chemicals and raw materials, these additional costs and capacity constraints affect operating costs and overall competitiveness.
International disruption is adding to the pressure. More than half (51%) of respondents said the ongoing Ukraine-Russia conflict was still affecting their business, while nearly three quarters (74%) reported an impact from disruption to shipping routes.
Regulation also remains a key concern for CBA members, with businesses also highlighting a lack of support for the chemical industry, high fuel prices and energy costs as factors affecting their operations and future planning.
“There were some welcome measures in the recent Budget, including the extension of the 5p fuel duty cut and HGV road tax holiday, as well as the introduction of electricity cost support for eligible energy-intensive manufacturers. These are positive steps and demonstrate some recognition of the pressures facing businesses. However, they need to be viewed in the context of several years of uncertainty and rising costs,” says Doggett.
“While individual measures offer some relief, they do not address the cumulative impact of the wider challenges of doing business in the UK. Businesses are having to manage rising costs across multiple areas, from wages and employment obligations to logistics, energy and regulatory compliance. For many, the priority is simply to maintain their current operations and retain their existing workforce. When one in five businesses is anticipating job cuts, we need to recognise the impact that the current business environment is having on employment and investment.”
Doggett believes that a more collaborative approach between Government and industry is essential to translating ambitions for economic growth and reindustrialisation into meaningful opportunities.
He concludes: “The UK chemical supply chain has an important role to play in reindustrialisation, economic growth and national resilience. Government must recognise the cumulative impact of its decisions and work with industry to create a more stable, competitive environment in which businesses can maintain employment, invest in skills and plan for sustainable growth.”