Decode: Big UK firms plan to cut hiring at fastest pace since epidemic

Large British businesses plan to cut hiring and scale back investment this year at the fastest pace since the epidemic, as the government announces big tax increases in its October budget, a survey showed on Monday.

Decode official websiteThe quarterly survey of the chief financial officers of 63 of Britain's biggest companies echoes a survey of small and medium-sized businesses, which have also been hit by employers increasing social security costs by 25 billion pounds ($31 billion).

Ian Stewart, chief economist at Deloitte, said: "With cost control a priority following the budget, CFOs have lowered their expectations for corporate investment, discretionary spending and hiring over the next 12 months."

The survey was conducted between December 3 and 16, and last week the pound fell and the yield on 30-year bonds soared to its highest level since 1998, in part due to concerns about an economic slowdown following the budget announcement.

Hiring intentions fell by the most since early 2020, capital spending plans were the weakest since the third quarter of 2023, and companies were the least willing to take risks on their balance sheets in more than a year. Corporate optimism fell to a two-year low, but overall sentiment was not as bleak as the lows in 2022 or 2020, Deloitte said.

Deloitte says chief financial officers still see the UK as a better place to invest than the eurozone, but its position has fallen more sharply than other regions, with Europe as a whole lagging behind the US as an attractive investment destination.

A separate survey by manufacturing trade group Make UK released on Monday said 57% of companies would increase investment once the government publishes details of its long-term industrial strategy in the first half of this year.

Manufacturers' views on whether the economy will improve or weaken this year are relatively even.

Stephen Phipson, chief executive of Make UK, said: "It is now vital that the government sets important current priorities as part of its formal industrial strategy." He added: "Doing so will help restore business confidence and ensure a positive start to the year."