Unemployment is on the rise, and AI may accelerate that growth. In February 2025, the unemployment rate was 4.4%, up from 3.9% a year ago. Research by Pleo has found that the number may increase further. One factor will be the rising cost of National Insurance, with employer national insurance contributions increasing next month.
The second is the influence of AI, with 57% of organisations looking to use AI rather than hire new employees. There are other benefits of investing in AI. 59% of business leaders in the UK believe it will be easier to use AI than motivate employees. That figure rises to 82% that are already using AI. Digital employees apparently require less effort to become productive.
In addition, 68% of employers facing increased costs will pass the costs on to customers. As a result, inflation is likely to rise. From the recent low of 2.6%, inflation has already crept up to 3.9% as of January 2025.
The research was published in Pleo’s “The CFO’s Playbook for 2025.” (Registration Required). The 2024 report is available here (registration required)
The full report is based on a survey conducted by Sapio Research, including a qualitative element. 3,250 finance professionals were interviewed across the UK, France, Spain, Germany, Denmark, Sweden and the Netherlands. The UK contingent numbered 500, and this article is based on that sample.
Optimism tempered by rising costs
While 70% of UK leaders are positive about business performance in 2025, fiscal challenges are a threat. The survey identified these fiscal challenges that include:
- Inflation (42%)
- High energy bills (36%)
- High business taxes (35%)
No doubt, the national insurance is seen as part of the third element. Though other increases, such as the increase to 14% next month of the Business Asset Disposal Relief, will also have an impact. 76% of UK Finance leaders have experienced unprecedented levels of pressure in the current economic climate.
With the business energy cap increasing by 6.4% and business water rates increasing by 8% starting from April 1st, these pressures are not relenting.
Are digital employees the answer
One avenue that employers are considering is AI and introducing digital employees to increase productivity rather than human employees. AI, and specifically Agentic AI, can reduce annual effort. 57% of UK finance leaders are more likely to invest in AI than human employees because of the rise in NI.
However, investing in AI is not a sure thing. Rand research found that around 80% of AI projects fail. According to the Pleo survey, many (47%) return to traditional and familiar solutions such as spreadsheets. The investment is often uncoordinated, with 52% of businesses saying that they have too many tools.
Furthermore, 72% of leaders say that this uncoordinated approach, with poor integration between tools and poor implementation, leads to frustration and lost time. According to research by HBR, workers lose around five working weeks per year context switching, meaning they spend approximately 9% of their annual work time switching between tasks or applications and reorienting themselves.
Despite this, 34% of UK businesses are already using AI to automate processes, freeing up time to spend on more strategic work. Therefore, it is not a matter of if, but when businesses implement AI.
What does this mean for Finance Teams?
The research also looked at what the rise of AI means for finance teams. 70% of UK leaders expect to place a higher focus on AI and tech skills when hiring. It isn’t clear whether this means prompt engineering or something deeper.
AI is changing the office of finance, though. 71% of respondents believe that AI will reduce the amount of manual work, freeing up time for more strategic work. The research falls short of asking whether this could lead to job losses, though.
Pleo offered advice for those considering the implementation of AI:
- Consider AI strategically and identify clear objectives
- Identify and then measure outcomes
- Understand how it will integrate with existing applications
- Implement quickly: the faster the project is completed, the faster the ROI
Organisations need well-integrated technology to be effective. For 73% of finance teams, visibility across all accounts, currencies and wallets in a single location is critical. However, when implementing AI or any technology, keeping humans in the loop is important.
Søren Westh-Lonning, Pleo CFO, commented, “As we move into 2025, businesses will continue to face uncertainty. But learning to manage uncertainties requires financial stability, not financial guesswork.
“To remain competitive, organisations must therefore empower their finance teams to become change-makers across the business and to pioneer financial stability.
This is no small feat and requires individuals to balance a huge remit, offensive and defensive financial strategies and greater collaboration across departments. AI can make this balance possible, but this does not mean leaders should embrace it blindly. Nor should they use it to replace their teams – even if, as the findings show, they are struggling to motivate them.
“Financial minds, and especially financial change-makers, are not easily replaced – especially in today’s climate. But, with the right technology and leadership, they can be easily empowered.”
Enterprise Times: What does this mean
What Pleo shared contains some interesting findings. It would have been useful to review the full report, but it was not made available in time for writing this article. Regardless, AI is here to stay. However, rash investments have led to the failure of many projects. The CFO must consider investments carefully, have the right people in place, and choose solutions that are fully integrated across their software architecture to gain the full value.
The big question is what the longer-term impact of cost rises and AI will be on unemployment and inflation. Will this, in turn, lead to a loss of revenue as organisations and individuals tighten their belts?
