2025 was the year regulation stopped being a cost, and became a constraint.
As 2025 draws to a close, a pattern is emerging across the UK economy. Regulation is no longer arriving as a series of discrete interventions, but as a cumulative operating condition, one that increasingly shapes how businesses invest, innovate, and engage with the state.
Individually, each new rule arrives wrapped in noble intentions. Collectively, they create an environment where enterprise is increasingly managed rather than enabled.
No one argues for a regulation-free economy. Consumer protections matter. Environmental responsibility is essential. But Britain's regulatory regime in 2025 has crossed a threshold. The sheer volume of new compliance burdens, tax increases, and operational restrictions, particularly in food, drink, packaging, and transport sectors, suggests a profound disconnect between Westminster's growth rhetoric and Whitehall's regulatory reality.
The HFSS Regulatory Labyrinth
The High Fat, Salt and Sugar (HFSS) regulations exemplify regulatory creep. From October 2025, businesses face television advertising bans before 9pm, total online advertising prohibitions, restrictions on multibuy promotions, and limits on where products can be placed in stores. These rules, which come into force on 5 January 2026, affect any business with 250 or more employees.
The execution reveals a tin ear to business realities. Companies must navigate a Nutrient Profiling Model, implement separate advertising strategies, redesign store layouts, and retrain staff. Simultaneously, government proposals include mandatory health food sales reporting, banning high-caffeine energy drinks to under-16s, and mandatory alcohol labelling.
But compliance alone won’t protect against scrutiny or political pressure, so what this creates for organisations is not just a complex compliance challenge, but growing reputational and strategic exposure.
The Packaging Compliance Quagmire
The Extended Producer Responsibility (EPR) for packaging represents regulatory complexity taken to dizzying heights. From January 2025, producers supplying household packaging became responsible for the entire lifecycle management, with disposal charges starting in October 2025.
Companies must submit granular data reporting, distinguish between household and non-household packaging, assess materials using the Recyclability Assessment Methodology, and pay fees: plastic at £423 per tonne, glass at £192 per tonne. Add the Plastic Packaging Tax at £223.69 per tonne, and businesses face bewildering overlapping compliance.
The industry’s bill for EPR packaging is set to rise by tens of millions next year, after Defra revealed the rates for most materials will shoot up by double the rate of inflation. Fees for rigid and flexible plastics are increasing from £423 to £455 per tonne (up 7.5%) with glass rising from £192 to £205 (a rise of nearly 7%). While industry bodies welcomed the advance notice of regulatory hikes, they warned the move would inevitably result in further food inflation next year.
The Deposit Return Scheme, launching October 2027, adds another layer: registration with a Deposit Management Organisation, charging deposits, installing reverse vending machines, and managing returns logistics. For smaller retailers, the capital investment could prove prohibitive. These aren't abstract compliance exercises. A can of soft drink carries the deposit, plastic packaging tax, EPR disposal fees, and administrative costs of three separate regulatory regimes.
As regulatory layers multiply, traditional responses begin to break down. Engaging late through consultations, relying on technical compliance arguments, or assuming policymakers will acknowledge the cumulative impact leaves businesses on the back foot, reacting to rules already framed against them. Complexity does not just increase cost; it narrows the space organisations have to influence outcomes once policy direction is set.
The Electric Vehicle Policy Confusion
EV policy showcases similar regulatory misalignment, removing incentives and introducing new taxes whilst maintaining ambitious targets. Having exempted electric vehicles from road tax for years, from April 2025 EV drivers pay £10 in year one, then £195 annually, and inNovember 2025, government announced Electric Vehicle Excise Duty (eVED) from April 2028, meanwhile, the Zero Emission Vehicle mandate requires 28% of new car sales to be zero-emission in 2025, rising to 80% by 2030.
The Cumulative Burden
Policy is not made in laboratory conditions. Consider a mid-sized food manufacturer in 2025: HFSS advertising restrictions requiring separate marketing strategies; packaging EPR obligations with complex assessment; Plastic Packaging Tax; business rates increases; National Insurance increases; preparation for Deposit Return Scheme 2027; potential future alcohol labelling obligations.
Each regulation brings compliance costs: legal advice, system changes, staff training, and administration. The Federation of Small Businesses estimates regulatory compliance costs UK small businesses over £20 billion annually and 2025's avalanche has only added to that burden.
Every hour spent understanding HFSS profiling is an hour not spent developing products. Every pound on packaging consultants is a pound not invested in production. Smaller businesses lack dedicated compliance teams, yet they face the same complex rules as major corporations without the resources to navigate them.
As a consequence, regulation crowds out the innovation and risk-taking that drives growth.
The net result is that organisations remain permanently on the back foot, absorbing new costs, new restrictions, and new scrutiny without ever shaping the conditions in which those decisions are made. Unless businesses find new ways to assert relevance, legitimacy, and public value beyond formal policy channels, they will continue to be governed by policy rather than participating in its direction.
Where’s the Growth?
The government insists it is pro-growth and pro-business. Yet the lived experience of 2025 suggests something more complex. When organisations are simultaneously reformulating products, redesigning packaging, absorbing higher employment costs, and navigating expanding compliance regimes, the issue is no longer any single policy, but the environment those policies collectively create.
None of this argues for regulatory nihilism. Food safety matters. Environmental protection is essential. But in a system where regulation accumulates faster than clarity, and cost compounds faster than certainty, organisations face a different kind of risk: not just higher overheads, but reduced agency.
In this environment, businesses that rely solely on traditional channels - late-stage consultations, technical compliance arguments, or quiet adaptation - find themselves permanently reacting to decisions shaped elsewhere.
Growth is constrained not only by cost but by the inability to influence how regulation is framed, justified, and received. The lesson from 2025 is not simply that regulation has increased. It is that organisations operating in regulated markets need new ways to assert relevance, legitimacy, and public value beyond the usual strategies. Without that, they will continue to absorb policy rather than participate in its direction, regardless of the intentions behind it.
