UK businesses 'to slash hiring rates' amid fears for economy after Trump imposes tariffs
14 April 2025, 12:55
Bosses at some of Britain's biggest businesses are preparing to slash hiring rates and reduce investment amidst fears of Donald Trump's tariff plans, a survey has found.
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Workers are set to feel the force of aggressive saving tactics by UK companies, as they supposedly draw up plans to make the deepest cuts to hiring since the covid-19 pandemic, Deloitte found.
Companies are set to water down planned pay rises to an average of 3%, to cope with the impact of the US president's trade barriers, according to the consultancy's quarterly survey of corporate finance chiefs.
These plans are in place despite predictions that inflation will rise to 3.1% over the course of next year, renewing the possibility of a further financial squeeze on households.
The move comes after Mr Trump imposed sweeping tariffs on imports to the United States, rocking the world economy, sending stock prices tumbling and sparking fears of a global recession.
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Since then, the American leader has rowed back on tariffs, reducing the rate paid on imports from most countries to 10% and, on Saturday, exempting electronics such as smartphones and laptops from the levy - including the 145% charge on imports from China.
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.”
The survey was carried out on the eve of Mr Trump's Liberation Day tariffs announcement on April 2 and two-thirds of executives said their priority will be to cut costs this year, while only one in 10 said their aim is to invest more.
Despite a cooling on the trade war from the US leader last week, the UK is still subject to a baseline 10% levy on all goods imported to the US, leading many experts to fear for the long-term impact on the country's growth and investment.
Businesses are already feeling the pressure this month after Rachel Reeves’s increased employer National Insurance rates kicked in.
Mr Trump's tariff's on imported goods will mainly impact manufacturing, but hiring in the financial services industry will also suffer.
Morgan McKinley’s London Employment Monitor has already felt these impacts, having reported a slump in job vacancies during the first three months of the year.
Mark Astbury, director at the recruitment firm, told the Telegraph: "The 11% year-on-year decline in job availability points to underlying structural pressures within the industry.“
"Persistent inflation, elevated interest rates and geopolitical tensions are fostering a conservative, risk-averse approach to hiring.“
Now that tariffs have been enacted, firms with international exposure are reassessing strategy and headcount plans, especially those tied to cross-border finance and trade.”
The government remains hopeful of a deal to exempt the UK from Mr Trump's tariffs, with Ms Reeves saying she was "resolved" to get "the best deal possible" for the UK.
But during the week, a senior Trump adviser suggested this was unlikely, saying the 10% tariff was now a "baseline" and anything below that would be "extraordinary".
Ms Reeves will aim to continue negotiations for an economic deal with the US later this month when she travels to Washington to attend the International Monetary Fund's spring meetings with other finance ministers.
