Economic challenges as UK business confidence hits six-year low

The headline number is blunt and a little chilling: confidence at -57% signals many finance chiefs expect tougher times. You can almost feel the change , CEOs and treasurers are trading optimism for a cautious, measured tone. According to Deloitte, the survey was taken between March 16 and 30, so it captures the immediate market reaction to fresh geopolitical shocks. For business leaders, that shift translates quickly into delayed projects, tightened hiring plans and a renewed focus on liquidity.

Geopolitical risk has replaced supply-chain angst

Geopolitics has vaulted to the top of the list of external threats for UK firms, overtaking the issues that dominated the post-pandemic years. Deloitte’s weighted risk rating for geopolitical problems leapt to 79, reflecting how wars and regional instability ripple through commodity markets, shipping and investor sentiment. In plain terms, executives are worried their assumptions about stable energy and trade have been upended, and that’s forcing conservative planning across sectors.

Energy and inflation: the twin pressure points

Energy costs and inflation are front and centre for finance teams. The survey shows worries about higher energy prices climbed sharply, and expected inflation a year out rose to 3.6%. That’s not just a macro statistic , it feeds directly into budgets, supplier contracts and wage negotiations. For managers, the practical response has been to prioritise cost control and cash preservation, because higher operating costs and the risk of rising borrowing rates squeeze margins fast.

What companies are actually doing now

The reaction from big firms has been immediate: 68% of CFOs called cost control a strong priority and many are pulling discretionary spending back hard. Forecasts for hiring and capital spending have deteriorated noticeably , a net 79% expect to cut hiring. Deloitte’s chief economist notes this is a rare concentration of focus on balance-sheet strength, with companies preferring lower risk over growth bets until the external picture stabilises. For employees and suppliers, that means slower recruitment and more pressure on project approvals.

How leaders should respond , practical advice

If you run a business, start with liquidity and scenario planning. Stress-test cash flows against higher energy costs and a moderate rise in interest rates, and prioritise projects that protect core revenue. Negotiate flexible supplier terms where possible, and review hiring plans with an eye to critical skills rather than broad headcount increases. Finance teams should also sharpen their risk-monitoring , geopolitical events can be sudden, so a faster decision cadence helps.

It’s a small change that can make every strategic move more resilient.

Make sure you have the solutions to the rising economic pressures facing the UK. Join our curated roundtable focused on finding key insights to the problem we’re all facing- Click here to find out more