As we enter the first new financial year under a Labour Government, the long-term trends affecting the UK economy remain much the same as in the previous.

The UK economy has been beset by low levels of investment since the 2016 Brexit referendum (1), and low levels of productivity since the 2008 financial crisis (2). Until 2022 the economy had experienced both historically low levels of average wage growth and low rates of price inflation since that crisis. In the period since, pay growth has risen much faster as inflation rose to levels last seen in the 1980s. The imposition of tariffs by several states may yet have an impact on the British economy, even if our trade is not directly affected.

There is evidence that inflationary pressure on practices remains higher than for the wider economy, owing to the potent mix of high staffing costs, high use of energy and plastic intensive materials and recent laboratory supply bottlenecks. We have tracked dental specific annual price inflation since October 2022, though there has been reduction in price pressure in some areas, others such as energy remain higher than before the pandemic (3).

Demand for NHS dentistry has steadily increased since the end of the last pandemic lockdown however access remains a serious problem for practices, remaining below 2019 levels (4). However government pay awards have not kept up with inflation.

Updates on contract reform

In England, where contract reform processes are in the earliest stages, the UDA system which has held practices back since implementation in 2006 has now, following additional price pressure pushed thousands of practices to reduce their NHS commitment, seeking private work to effectively stabilise their balance sheets.

Northern Ireland practices saw an uplift in the price for fillings, extractions and root canal treatment in March 2024, worth £9 million to the overall dental budget including £3.9 million for a Dental Access scheme and money towards child examinations.

In Scotland, a process of negotiation in 2023 resulted in a reformed and slimmed down item of service list, which was rolled out on 1 November 2023. On average the overall value of the item of service fees has increased by 20-25% since payment reform (5).

Contract reform discussions in Wales are now concluded ahead of a 2026 rollout of new terms. However, many of the details await the outcome of public consultation (6).

New Government

However, in the last twelve months, one major change has occurred in the ushering in of a new government, giving us the first Labour Health Secretary since 2010. In their election manifesto, a range of policy interventions tied to increased urgent dental appointments and contract reform were announced. Upcoming discussions on the changes to the contract in England will be heavily influenced by the conclusion of a spending review in June, although there is no clear timeline for reform. However, in February 2025 it was announced that the 700,000 urgent care appointment pledge in Labour’s manifesto would not rely on previously promised funding, but instead be funded from the existing budget (7).

In the meantime, a range of other non-dental specific policies have been announced which affect practices and their finances. These include but are not limited to a rise in the minimum wage, changes to stamp duty, implementation of new workers’ rights and changes to employers National Insurance contributions.

Read more in the Staffing section of this report.

Global conditions

The Government took office vowing to invest in public services, raising £22 billion for the NHS over two years, through taxation. A spate of turmoil in the gilts markets, and then in early April the imposition of international tariffs by the United States on imports put further pressure on the Chancellor Rachel Reeves to meet the Government’s fiscal rules. Several cuts to departments have been announced, along with the abolition of NHS England, which oversees dentistry and other primary care, partially to reduce costs. It is deemed likely by most economic commentators that she will be required to make cuts or raise taxes further at the next budget this autumn.

The Chancellor aims to restore long term growth to the economy, pressing on with changes to local government and planning to spur infrastructure investment and raise productivity. However, global tensions between trading partners along with multiple global conflicts make for a more volatile market for goods. In 2024 the red sea shipping route has passed traffic much more slowly as ships were targeted by Houti fighters in Yemen, pushing up prices (8).

In February, the Bank of England cut interest rates to 4.25 %. It noted the uncertainty in the global economy from changes in trade policy and a likely increase in inflation later this year. The Bank thinks economic growth has slowed since mid-2024, with GDP growth for Q1 of 2025 at zero, below the forecast of 0.6% (9). Borrowing costs are now their lowest since June 2023 (1), and potentially set to reduce further as the economy and hiring cool (11) amid declining business confidence.

Updates on contract reform

New Government

Global conditions

Notes

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