Confidence among Britain’s largest companies has fallen sharply, reaching its lowest level in six years, as escalating geopolitical tensions and economic pressures weigh heavily on business
sentiment.
A quarterly survey by Deloitte revealed that chief financial officers (CFOs) across major UK firms have grown significantly more pessimistic. Net confidence dropped to -57% in the second half of March, down from -13% at the end of last year—marking the weakest reading since early 2020, when the COVID-19 pandemic first struck.
The downturn is being driven largely by concerns over rising energy prices, fueled in part by the ongoing Iran conflict, alongside fears of persistently high interest rates. As a result, companies are rapidly shifting into defensive mode, prioritizing cost-cutting over expansion.
According to the survey, businesses are scaling back hiring plans, reducing discretionary spending, and postponing investment decisions. A striking 61% of CFOs said they are “significantly concerned” about the impact of inflation and energy costs on borrowing conditions.
Economic indicators paint a similarly cautious picture. Data from S&P Global shows that growth in the UK’s private sector slowed markedly in March, as companies faced mounting cost pressures. Inflation expectations have also risen, with firms now forecasting a rate of 3.6% over the next year—the highest level since late 2023.
“Rarely in the past 16 years have CFOs been so focused on cost control,” said Deloitte UK’s chief economist Ian Stewart. He noted that firms are lowering expectations for profit margins while tightening spending and conserving cash.
The outlook for employment is particularly bleak. A net 79% of CFOs expect hiring to decline over the next 12 months, a significant increase from 55% at the end of 2025 and the highest level since mid-2020.
Despite this, there are tentative signs of stability in the labour market. A separate survey by the Recruitment and Employment Confederation indicated that while hiring remains subdued, conditions did not worsen in March. Chief Executive Neil Carberry described the Iran conflict as a “headwind” but noted that the job market has shown signs of gradual stabilization so far this year.
The Deloitte survey, conducted between March 16 and 30, gathered responses from 79 CFOs, including representatives from FTSE 100 and FTSE 250 companies, as well as large private firms and UK subsidiaries of multinational corporations. Photo by Philippe Salgarolo, Wikimedia commons.
