British businesses are more pessimistic about their economic prospects than those in heavily sanctioned Russia as bosses plan mass job cuts in the wake of Rachel Reeves’s record tax raid.
A closely watched survey suggested that UK sentiment had plunged faster than any other major economy since October, when the Chancellor used her maiden Budget to announce a record £40bn of tax rises.
The poll by S&P Global suggested the UK was headed towards stagflation, with bosses planning to shed jobs faster than other major economies against a backdrop of the weakest global hiring plans since lockdown.
It showed that optimism in the UK had completely reversed over the past four months, compared with an improvement in the US and eurozone, with a “sharp downgrade in sentiment in the UK as companies scaled back expectations following the Government’s autumn Budget”.
Concerns are mounting about the health of the world’s biggest economy. While S&P’s survey showed an improvement in US sentiment, the poll was conducted before Donald Trump suggested a US recession could not be ruled out against a backdrop of a global trade war.
S&P’s poll showed that British expectations for business activity were now below rates in Russia, India and the global average, adding that the UK also posted a negative outlook for profitability for the first time since October 2022, in the wake of Liz Truss’s mini-Budget.
The UK economy has barely grown since Labour took power last summer, while inflation now stands at 3pc, which is almost at the level at which Andrew Bailey will have to write to the Chancellor explaining why price rises are so far away from the Bank of England’s 2pc target.
Businesses are concerned by a raft of cost increases from April that will see their National Insurance bills increase sharply alongside big rises in the minimum wage, which several business surveys have indicated will lead to higher prices and unemployment.
S&P’s survey also revealed that British businesses were also among the world’s most concerned about higher prices, second only to Russia where interest rates are currently at 21pc and inflation in double digits.
Andrew Harker, the economics director at S&P Global Market Intelligence, said: “Companies around the world are increasingly taking a ‘wait-and-see’ approach to hiring and investment plans amid a range of uncertainties surrounding geopolitics and global trade. Projections for employment, capital expenditure and R&D investment were all scaled back in February relative to the position in October last year, revealing a belt-tightening approach to survival in uncertain times.”
The survey added that firms around the world downgraded their hiring plans, with the net balance for employment intentions now at the lowest since mid-2020 at the height of lockdown.
