Large British businesses are bracing for a challenging year, with plans to reduce hiring at the fastest pace since the onset of the COVID-19 pandemic, according to Deloitte’s latest quarterly survey of chief financial officers (CFOs). The survey, which included 63 of the UK’s largest companies, also highlighted a sharp decline in investment plans as businesses grapple with rising costs and tax burdens.
The survey took place between December 3 and December 16, before recent economic turbulence that saw sterling drop and 30-year government bond yields hit their highest levels since 1998. These developments have further fueled concerns about the UK’s economic outlook.
Key Findings from the Deloitte Survey
- Hiring Plans: Employment intentions fell at the steepest rate since early 2020.
- Investment: Capital expenditure plans hit their lowest levels since Q3 2023.
- Risk Appetite: Businesses showed the lowest willingness to take on risk in over a year.
- Business Optimism: Sentiment dropped to its weakest point in two years, though it remained above the lows seen in 2020 and 2022.
Deloitte’s chief economist, Ian Stewart, attributed the pullback to cost-control measures in response to the October budget. The budget introduced a £25 billion hike in employers' social security charges, which has dampened corporate confidence and spending.
CFOs still view the UK as a more attractive investment destination than the eurozone, but its standing has fallen more sharply than other regions. Europe, as a whole, continues to lag behind the United States in terms of investment appeal.
Manufacturers Call for Urgent Action
In a separate survey by manufacturing trade body Make UK, 57% of companies expressed intentions to increase investment once the government outlines its long-term industrial strategy, expected in the first half of the year. However, manufacturers remain divided on whether the economy will improve or weaken in 2025.
Make UK Chief Executive Stephen Phipson emphasized the importance of swift government action, stating:
“It is now vital that government sets out as a matter of urgency the immediate and significant priorities as part of its formal industrial strategy. By doing this, it will help re-boot business confidence and ensure the year gets off on a positive footing.”
