People walking at the London financial district. — Reuters
LONDON: Large British businesses plan to cut hiring this year at the fastest pace since the Covid-19 pandemic and scale back investment due to big tax rises announced in the government’s October budget, a survey shows.
Deloitte’s quarterly survey of chief financial officers (CFOs) at 63 of Britain’s largest companies echoed other surveys of smaller and medium-sized businesses also hit by the £25bil (US$31bil) hike in employers’ social security charges.
“With cost control to the fore in the wake of the budget, CFOs have trimmed expectations for corporate investment, discretionary spending and hiring in the next 12 months,” Deloitte chief economist Ian Stewart said.
The survey took place between Dec 3 and Dec 16, before last week’s slide in the pound and a surge in 30-year government bond yields to their highest since 1998, partly on concerns about a slowdown in the economy since the budget.
Employment intentions fell by the most since early 2020, capital expenditure plans were the weakest since the third quarter of 2023 and businesses were the least keen on taking risk on to their balance sheet in more than a year.
Business optimism fell to a two-year low but the overall mood was less bleak than lows in 2022 or 2020, Deloitte said.
CFOs still judged Britain to be a better place to invest than the eurozone but its standing had fallen more sharply than other regions, and Europe as a whole trailed the United States as an attractive investment destination, Deloitte said.
A separate survey published yesterday by manufacturing trade body Make UK reported that 57% of companies would increase investment once the government sets out details of its long-term industrial strategy, due in the first half of this year.
Manufacturers were split relatively evenly on whether the economy would improve or weaken this year.
“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,” Make UK chief executive Stephen Phipson said.
“By doing this, it will help re-boot business confidence and ensure the year gets off on a positive footing,” he added. — Reuters
