Britain’s biggest businesses are preparing to slash hiring and scale back investment plans to stave off the threat posed by Donald Trump’s trade war.
Plans are being drawn up for the deepest hiring cuts since 2020, according to Deloitte’s quarterly survey of finance chiefs, which will see workers bear the brunt of aggressive savings.
To cope with the impact of the US president’s global tariffs, companies are set to water down planned pay rises to an average of 3pc, despite predicting that inflation will rise to 3.1pc over the course of next year.
This presents the possibility of a renewed squeeze on households – as wages fail to keep pace with the cost of living.
Two-thirds of executives said their priority will be to cut costs this year, according to the survey, which was carried out on the eve of Mr Trump’s Liberation Day tariffs announcement on April 2.
Only one in 10 said their aim is to invest more.
It comes amid fears that Mr Trump’s trade war is damaging confidence among UK businesses, as many fear the long-term impact of tariffs on growth and investment.
Despite Mr Trump watering down his trade war last week, the UK is still subject to a baseline 10pc levy on all goods imported to the US.
Amanda Tickel, head of tax and trade policy at Deloitte, said: “Previous periods of uncertainty over future terms of trade have resulted in a prolonged squeeze on investment.
“This is still a rapidly evolving environment, and businesses will need to be proactive in mitigating the effects of tariffs. However, they will be unlikely to actually reconfigure their global supply chains or production until they see the results of negotiations or responses by other nations.
“Right now, businesses will be modelling the potential impacts, assessing whether their customs operations are prepared and ensuring they have as much flexibility as possible to source and supply.”
Higher levels of tax have also climbed up bosses’ lists of worries, as Rachel Reeves’s increased employer National Insurance rates kicked in this month to pile more pressure on businesses.
Mr Trump’s trade war focuses on imported goods, but it is not only manufacturers that are suffering.
Hiring in the financial services industry is also struggling, with Morgan McKinley’s London Employment Monitor reporting a slump in job vacancies during the first three months of the year.
“The 11pc year-on-year decline in job availability points to underlying structural pressures within the industry,” said Mark Astbury, director at the recruitment firm.
