Finance bosses expect the sharpest decline in corporate hiring since the third quarter of 2020 as geopolitical risks escalate.
A fresh report from Deloitte has showed signs of a waning job market with wage growth expect to slow from 3.6 per cent to three per cent.
A net 14 per cent of chief financial officers said they felt more pessimistic about their business prospects than three months ago.
This comes after business confidence took a bruising following the Autumn Budget.
Chancellor Rachel Reeves’ flurry of tax hikes has led to firms winding down hiring or upping prices.
The changes to employers national insurance contributions and the minimum wage have weighed on business’ books. A net 63 per cent of respondents expect operating costs to increase in the next year.
Comparatively, only 35 per cent predicted revenue increases with a majority foreseeing declining margins.
Bosses predict interest rates will fall to four per cent, according to the report, with inflation expected to be 3.1 per cent for the next year.
Amidst this, finance bosses have shown more caution on the UK economy. Only 12 per cent believed now was a good time to take on more risk, compared to the long-term average of 25 per cent.
Geopolitical risks highest since early 2022
Deloitte’s report showed geopolitical risks ranked as the business leaders’ top concerns. This was the highest rating since early 2022 – when Russia invaded Ukraine.
Concerns specifically around US economy volatility hit their highest levels in nearly five years.
President Donald Trump’s bait-and-switch on tariffs since his inauguration in January has sent global markets into a period of turbulence.
The survey responses came ahead of Trump announcing a series of fresh levies in his ‘Liberation Day’ speech. These have since been rolled back – except for a current 145 per cent import tax slapped on China.
Nearly half of finance bosses have said tariffs, sanctions and market access restrictions were a significant concern – a major increase from 15 per cent last year.
The uncertainty had also led to executives delaying major changes to supply change or production.
Amanda Tickel, head of tax and trade policy at Deloitte UK, said: “Given widespread speculation over the scale and scope of US tariff rises during the survey period, it is unsurprising that chief financial officers reported elevated levels of uncertainty.”
Tickel added: “This is still a rapidly evolving environment, and businesses will need to be proactive in mitigating the effects of tariffs, however, they will be unlikely to actually reconfigure their global supply chains or production until they see the results of negotiations or responses by other nations.”
To combat the rising challenges, Deloitte’s report showed UK chief financial officers were adopting their most defensive strategies since early 2020.
This included 63 per cent of respondents shifting focus to cost control – the second-highest amount on record.
A net 30 per cent expected declines in capital expenditure and 58 per cent anticipated cuts in discretionary spending.
Ian Stewart, chief economist at Deloitte UK, said: “Although large UK businesses are preparing for turbulence, levels of pessimism have not fallen to the low that was seen during the pandemic.
“Finance leaders have a continued focus on costs and hiring, and the prioritisation of more defensive strategies is standard practice amongst business leaders during challenging times.”
The report surveyed 67 finance bosses, including the chief financial officers of 14 FTSE 100 and 20 FTSE 250 companies. The remaining were a part of other UK-listed companies.