Britain’s finance chiefs have gone completely on the defensive as the fallout from the war in Iran sends confidence plummeting to levels not seen since the country’s first coronavirus lockdown more than six years ago.
Two of the most closely watched barometers of corporate sentiment, Deloitte’s monthly CFO survey and BDO’s manufacturing index, paint a picture of a business world bracing for continued turmoil rather than focusing on growth. The message from boardrooms is clear: save money, cut costs and wait for the storm to pass.
According to the Deloitte survey, CFO confidence is at its lowest level in six years, with geopolitics once again cited as the biggest external threat. The company’s chief economist, Ian Stewart, said the Middle East conflict had caused a real shock and brought optimism back to the darkest days of the pandemic. For financial managers accustomed to dealing with uncertainty, the comparison is sobering.
BDO’s numbers tell a similarly grim story. Business output fell last month for the first time since February 2021, with services and manufacturing bearing the brunt. Scott Knight, the company’s head of growth, cited soaring energy and commodity prices as the main cause, noting that a fragile truce between Washington and Tehran had provided only a temporary respite.
The consequences are already having an impact on the economy. Higher raw material costs are squeezing manufacturers’ margins, while both companies and consumers have begun tightening their belts in anticipation of rising inflation. Deloitte found that business leaders are most concerned about the war’s impact on energy prices, inflation and interest rates, which economists now expect to rise this year. The specter of increasing cyberattacks, possibly orchestrated by state-sponsored actors, is adding further concern.
The job market is feeling the cold. BDO’s employment index has fallen to a 15-year low as companies signal inflationary pressures will limit their ability to hire new staff. The accounting firm warned that demand for hiring is expected to remain subdued for the remainder of 2026. A separate report from KPMG and the Recruitment and Employment Confederation found that demand for permanent roles and labor continued to decline in March, although at a gentler pace than in previous months. Wage growth, meanwhile, was described as marginal.
There is a thin glimmer of hope. Jon Holt, chief executive of KPMG, suggested that the ongoing decline in hiring activity could begin to ease. Still, he was quick to warn that any meaningful recovery depends on greater clarity about the course of the conflict and its broader economic consequences. Without this, he warned, there would be a risk that hiring decisions and capital investments would be postponed again, hindering sustained improvement in the labor market.
For Britain’s finance chiefs, many of whom come from the FTSE 100 and FTSE 250, balance sheet stability is the top priority for now. The vast majority told Deloitte they planned to reduce both spending and hiring in the coming months. As Stewart put it, rarely in the last 16 years have British CFOs focused so single-mindedly on cost control.
It is an attitude born not of panic but of stubborn pragmatism. Until the geopolitical fog clears and energy markets find some semblance of stability, British corporations appear content to hide and ride out the crisis.
