In the lead-up to President Donald Trump’s April 2nd tariff announcements, Britain’s largest companies took their most defensive position since early 2020 and focused on increasing cash flow, cutting expenses, and reducing debt, according to a Monday survey.
Deloitte’s quarterly survey of major British companies’ chief financial officers, conducted between March 18 and 31, found that their optimism regarding their firm’s financial prospects is still higher than it was after Russia’s full-scale invasion of Ukraine and the COVID-19 epidemic.
Deloitte reported that “defensive” strategies had gained a lot of ground at the expense of a more growth-oriented approach.
Amanda Tickel of Deloitte UK’s tax and trade policy department said that the CFOs expressed a high level of uncertainty due to the widespread speculation about the size and scale of the U.S. Tariff increases during the survey period.
Cost-cutting was the top priority for 63% of CFOs, up from just 52% three months earlier. This is also the second highest level ever recorded. 20% of CFOs ranked introducing new products or entering new markets as a top priority, down from 25 percent before.
Businesses expect to cut hiring to the lowest level since the third quarter of 2020, and wage growth will slow to just 3% in the next year.
Deloitte stated, “Large UK businesses are bracing themselves for turbulence.”
Profit margins would still be expected to decline despite these measures as costs were projected to increase faster than revenues over the next year due to the big increase in payroll taxes, which took effect this month, as well as the near 7% hike in the minimum wages.
Last month, budget forecasters for the government halved their economic growth projections for 2025, reducing it to just 1%. They had previously anticipated a boost in 2025 from increased public spending following a disappointing 2024.
Deloitte’s survey was based upon responses from 67 chief financial officers (CFOs) of major companies, including 42 U.K. listed companies that account for 18% the capitalisation of Britain’s stock exchange.