Your support helps us tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is unfolding. Whether it’s investigating the finances of Elon Musk’s pro-Trump PAC or producing our latest documentary, The A Word, which shines a light on American women fighting for reproductive rights, we know how much it is important to analyze the facts from the messages.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to continue sending reporters to talk to both sides of the story.
The Independent is trusted by Americans across the political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our paid reporting and analysis. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.
Rachel Reeves is flying from China to London facing a serious new warning after Deloitte reported that business chiefs’ confidence is at one of its lowest points since the Covid-19 pandemic in 2020.
After facing a barrage of criticism for going ahead with her controversial trip to China, the chancellor is being told her handling of the economy is being questioned by some of the country’s biggest companies.
To make matters worse, she may be forced to fire her city minister Tulip Siddique over allegations of receiving gifts from her aunt and ousted Bangladesh leader Sheikh Hasina when she was in power.
According to the survey of 63 chief financial officers (CFOs) at large companies, a net 26 percent reported feeling more pessimistic about their business prospects than three months ago, marking the first time sentiment has dipped into negative territory. since the second quarter of the year. 2023.
The survey is the 70th quarterly survey of Chief Financial Officers and Group Finance Directors of major UK companies. Those surveyed include CFOs of 29 FTSE 350 companies. The rest were CFOs of other UK-listed companies, large private companies and UK subsidiaries of large overseas-listed companies.
While confidence is still above the lows of 2020 and Liz Truss’s slim budget in 2022, a net 58 per cent expect UK corporations to cut discretionary spending and a net -64 per cent expect employment growth, which it is a four-year low.
The figures appear to underline a crisis of confidence in the Labor government to deliver on its number one mission of economic growth.
Behind the scenes, Ms Reeves is battling to prove the government’s economic plan is working, with the chancellor reportedly ordering cabinet ministers to be “relentless” in identifying public spending cuts.
An internal letter from the Treasury about Ms Reeves’ spending review, seen by Telegraphadmits that difficult budget decisions will be needed and emphasizes that “growth is the only way to deliver better results in public services, without raising taxes on working people and is our primary mission for this Parliament”.
“The 2025 spending review cannot be a spending review as usual,” the letter warns. “Success will require relentless prioritization.”
Employment expectations have also seen the sharpest drop since the pandemic began in early 2020. Only 18 percent of finance executives in the panel think now is a good time to take additional risk on their balance sheets, appetite weakest for risk in five quarters.
Ian Stewart, chief economist at Deloitte, said: “With cost containment at the fore in the run-up to the Budget, chief financial officers (CFOs) have cut expectations for corporate investment, discretionary spending and employment over the next 12 months.
“But despite falling business confidence, we expect to see UK growth pick up over the summer on the back of easy fiscal policy and interest rate cuts, with GDP growth likely to outpace the result of 2024 and the performance of the euro area.”
He added: “2025 looks likely to be a year of continued if modest growth in the UK. Looking ahead, a continued emphasis on policies to unlock the UK’s potential remains key to changing the trajectory of activity.”
The findings come after last week saw a number of indicators that led to warnings of a possible recession and financial crisis.
The pound fell sharply against the US dollar and the euro, gilt bonds were at an even higher level than the crisis that forced Truss out of office, meaning Mrs Reeves was on the verge of having to break the rule its golden for borrowing.
Meanwhile, a report from the Chartered Institute of Procurement and Supply (CIPS) suggested that imports of key products such as food and electronic goods could rise by 20 percent this year due to global volatility. This would lead to a new cost of living inflation crisis.
As Ms Reeves faces heavy criticism for going ahead with her controversial trip to China this weekend, political opponents seized on the poll’s latest findings.
Shadow business and trade secretary Andrew Griffith said: “Survey after survey shows that the Labor budget has damaged business confidence and our economy.
“The chancellor has made Britain more vulnerable because of her decisions.
“This is a crisis of Downing Street’s making and, sadly, it could get much worse for families across the country. Labor needs to work out how to turn this around.”
The Deloitte survey was also bad news for workers with Ms Reeves’ national insurance hike in the Budget blamed for low recruitment and restrained pay rises.
Salary increases are slowing, with CFOs reporting that average salaries rose 4 percent in their business over the past 12 months, up from 4.6 percent in the previous edition of the survey. They expect the pace of wage growth to slow further to 3.2 percent over the next 12 months.
And with Donald Trump set to take over the White House this month, a net plus 59 percent of CFOs suggested the US is now an attractive place to invest compared to -12 percent for the UK. This was still more attractive than the EU economies, which rate -36 percent.
Despite the row over the Beijing trip, science secretary Peter Kyle defended the chancellor’s record on the economy today and insisted she has returned with “solid investment commitments” as the government commits to “rebuilding the relationship with China”.
Kyle said: “I think what we’ve seen, for the chancellor to go there, represent Britain on the world stage, come back with solid investment commitments, but she’s also managed to raise human rights issues that I think everyone in this country is disturbed.
“Now the alternative is that we sit here and we don’t commit, we don’t even come back with £600 million, which will lead to future investments in the future (sic).
“So is the answer that it’s not big enough to do nothing? That’s what the conservatives say, they say she shouldn’t go, we shouldn’t have any engagement. This is our fourth largest trading partner.”
He argued that Ms Reeves “couldn’t fix everything in 12 months” and had been given “a terrible legacy” by the Tories, including a £22billion black hole in the finances.
But Tory shadow chancellor Mel Stride said the chancellor’s visit to China was “tone deaf” and Ms Reeves needed to “secure” UK markets.
Responding to the Deloitte survey, a Treasury spokesman said: “Despite a difficult legacy, this Government is determined to drive growth and work in partnership with businesses to invest in Britain’s future so we can we make every part of the country better.
“That’s why we’re delivering our Plan for Change with investment and reforms to deliver growth and put more money in people’s pockets. Our industrial strategy will also focus on the key sector of advanced manufacturing, providing security and stability for companies, increasing our competitiveness and unlocking investment in industry.
“This government remains steadfast in promoting the UK as a global leader. With £63 billion in investment secured at last year’s International Investment Summit set to create 38,000 jobs, the Chancellor’s visit to China this weekend and her upcoming trip to Davos demonstrate our commitment to driving growth and creating international partnerships.
