Monday 13 October 2025 6:24 am
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Monday 13 October 2025 10:19 am
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Finance chiefs are losing faith in Labour’s growth mission due to higher costs.
UK finance chiefs believe the country is falling behind rivals as costs are stacking up and squeezing profit margins, a new survey has shown, with further alarm bells ringing that businesses are losing faith in Labour’s drive for growth.
The government has moved to curry favour with top investment bosses as Rachel Reeves met the likes of JP Morgan’s Jamie Dimon and Goldman Sachs’ David Solomon to encourage them to back the UK.
But a leading survey of top finance chiefs has suggested that hope in the UK is quickly fading while separate data has pointed to a decline in output across the economy.
Research by Deloitte in September showed that 84 per cent of chief financial officers (CFOs) expected operating costs to rise, prompting business leaders to take control of cash flows.
The survey of 68 executives, including 11 from FTSE 100 companies, revealed that operating margins were expected to decline at nearly half (47 per cent) of firms, the highest reading since the second quarter of 2023.
It also showed expansion plans were put on ice.
One quarter of respondents said they would introduce new products or services, one eighth would invest in new capital and one tenth (11 per cent) would look to take over other companies.
Inflation expectations were set to hold steady at 3.2 per cent in a year’s time while wage growth had averaged at around 3.5 per cent in the last year.
Ian Stewart, chief economist at Deloitte UK, said finance chiefs were less concerned about issues such as the war in Ukraine and were more worried about the UK’s own competitiveness.
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“CFOs have responded by strengthening balance sheets through a focus on cost control, building cash reserves, and reducing debt,” Stewart said.
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Deloitte’s survey was not the only set of concerning data landing on Reeves’ desk on Monday.
The consultancy BDO also suggested that business output had fallen below long-term trends as the services sector saw its largely month-on-month drop since September 2022.
Firms responding to its survey said higher taxes on hiring, introduced via Labour’s hike to employers’ national insurance contributions (NICs), had dampened work.
Employment had also hit a 13-year low, with fewer firms expecting to hire more workers in the next year.
BDO’s survey may be more concerning for the Treasury given August data had been more positive.
“The uptick we saw in August was a false dawn,” said Scott Knight, head of growth at BDO.
“While there is a kernel of hope amongst the mid-market, it is fragile and they need clarity from the top before they can take any meaningful investment risks.
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