UK Dentistry: An Economic Check-Up

We enter 2025 with a little bit of a sense of unease, the economic sentiment casting a long shadow over all sectors, including dentistry.

With Chancellor Reeves's autumn budget and its hike in employer's National Insurance contributions (NICs), poised to significantly impact hiring and investment across the board, coupled with other economic headwinds, creates a complex, if not entirely predictable, landscape for practices and the wider industry.

Simply put, the increase in employer's NICs directly translates to higher operational costs for practices. As the British Dental Association has consistently highlighted, they already operate on tight margins, battling rising costs of materials, energy and ever-increasing regulatory compliance. This additional financial burden could force owners to make difficult, perhaps inevitable, choices: reduce hours, delay investments in new equipment (which, let's be honest, are often delayed anyway), increase patient fees, or accept the economies of scale, marketing support and admin power of joining a DSO. As the BDA stated in response to previous economic pressures, "The current climate is putting immense pressure on practices, and without adequate support, patient access to vital dental care is at risk." This echoes concerns raised across various sectors, as highlighted by the Institute For Fiscal Studies , which has consistently warned of the potential negative consequences of tax increases on business investment and employment. Colour me unsurprised.

The ongoing struggle with contract funding further exacerbates financial pressures on practices that provide NHS services. As we have all seen, this is leading to a growing trend of practices reducing their NHS commitment or moving entirely to private, which in turn is having significant implications for the patient, especially in areas with high NHS dental need or remote access.

The impending rise in the national living wage presents a further challenge, particularly for practices employing a large number of support staff. While ensuring a fair wage is crucial, this increase, combined with higher NICs, could strain practice finances further. This situation is mirrored in other consumer-facing sectors, such as hospitality and retail, which are also grappling with stubbornly subdued consumer confidence. As the Centre For Retail Research Limited has noted, "Consumer confidence is a key driver of retail spending, and persistent economic uncertainty is likely to keep spending subdued." This subdued consumer confidence has significant implications for dentistry, with patients potentially postponing non-essential treatments or opting for cheaper alternatives, impacting practice revenue (but a definite win for the challenger brands!)

It’s a classic case of tightening belts.

Generally speaking, household finances face a mixed, though predominantly challenging, picture. While wages have generally tracked above inflation (which rose to 2.6% in November and is likely to remain stubbornly above the bank's target rate throughout the year) the rising cost of living, including energy, water and council tax, will put pressure on disposable incomes. This pressure will likely translate to reduced spending on non-essential items...including dental treatments. Less disposable income = less elective procedures. This has serious implications for preventative care too, leading to increased long-term problems and higher costs down the line.

A penny saved now, a pound (or more) spent later, as they say.

Furthermore, the Bank of England's likely reduced interest rate cuts in 2025 will have implications for practices seeking loans for expansion or equipment upgrades. Higher interest rates increase the cost of borrowing, potentially hindering investment. This is compounded by the persistent skills shortage within the clinical profession, which continues to impede growth. Recruiting and retaining qualified dentists, hygienists and support staff remains a significant challenge, further exacerbated by economic uncertainty. I'm seeing significant increases in advertised salaries, reflecting the landscape and the struggle for to attract and retain talent, it’s a perfect storm, really.

The new year will also pose other challenges...

...Trump.

For some big multinationals, there may be a further headwind in the form of tariffs imposed by the incoming administration in the US, particularly for manufacturers and suppliers who rely on international trade. A trade war could disrupt supply chains and increase costs, impacting the availability and affordability of equipment and materials. The UK, the EU and Japan have all indicated they would seek to avoid tit-for-tat retaliatory measures - but China is unlikely to take such an approach.

Multinationals doing business in or with France and Germany may also see their earnings hit by the tepid economic conditions in both countries - with activity in the latter put on hold until after the snap election in February.

Because, of course, things weren’t complicated enough already!

However, it is not all doom and gloom (though it’s certainly tempting to think so). The expectation that most people will maintain their employment offers some semblance of stability and the increasing integration of AI into business operations presents opportunities for the dental sector. Dental businesses of all shapes and sizes will spend an increasing amount of time trying to figure out how to incorporate AI into their operations but it is genuinely something that (and already is!) streamlining administrative tasks, improving diagnostic accuracy and personalising treatment plans, potentially enhancing efficiency and patient care - saving time and...money!

A huge opportunity for practices to leverage technology to navigate the economic challenges, assuming they can afford the initial investment of course AND there's also massive interest in teledentistry and remote monitoring technologies, again offering more accessible and affordable care options for patients, particularly in rural or underserved areas.

In conclusion, the UK dental sector faces a challenging, if not entirely unexpected, 2025.

Yes, the economics will undoubtedly put pressure on practices and patients, but, the sector can (and always does) adapt, change and rise to the challenge with renewed focus on efficiencies, truly embracing tech (think 3D Printing, AI, CAD/CAM, Imaging) and actually advocating for policies that support both practices and patient access. The long-term health of the sector depends on navigating these challenges effectively and ensuring that care remains a priority, even in times of economic uncertainty.

We can only hope for the best, while preparing for the more likely scenario.

Follow Alex Hepworth for more insights throughout 2025!

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