More than 80% of UK businesses have paused investment and hiring plans due to the escalating Iran war, according to new surveys. The conflict, now in its third month, has driven up energy costs and disrupted supply chains, prompting firms to prioritise cost management over growth.
A survey by accountancy firm BDO found that over half of medium-sized businesses cited higher energy and fuel costs, along with supply chain pressures, as their biggest challenges. Richard Austin, a partner at BDO, said companies were “struggling to absorb the latest economic shock in an uncertain global and political backdrop”.
Separate data from the Recruitment and Employment Confederation (REC) showed UK job vacancies fell 7.7% in April compared to March, to 711,733. Vacancies for pilots, travel agents and train drivers saw the steepest declines. REC chief executive Neil Carberry warned the labour market was entering “a more unpredictable phase”, with hiring likely to take a further hit due to the Gulf conflict and domestic political uncertainty.
Despite the gloom, there are some bright spots. Nearly a third of business leaders told BDO they are prioritising UK-based suppliers, and 28% are considering moving production closer to home, potentially boosting British manufacturers. The UK economy grew 0.3% in March, defying expectations of a weaker first quarter, but economists warn this may reflect stockpiling ahead of expected supply shortages and higher borrowing costs.
