UK firms halt investments and hiring as Iran war pushes up costs, bosses warn

"More than two months into the US-Israeli war on Iran, leading surveys of UK employers showed companies were increasingly prioritising cost management over growth as rising costs and global uncertainty weigh on confidence. According to a survey by the accountancy firm BDO, more than half of medium-sized businesses said higher energy and fuel costs, combined with supply chain pressures, were the biggest challenges they face as the Middle East conflict continues."

"Amid rising domestic political uncertainty as Keir Starmer's Labour government braces for a leadership challenge, business leaders said companies were holding back from investing in Britain. Richard Austin, a partner at BDO, said instead of focusing on expansion, UK businesses were struggling to absorb the latest economic shock in an uncertain global and political backdrop."

"The survey comes as the chancellor, Rachel Reeves, travels to Paris for meetings with G7 finance ministers to coordinate action between the world's most powerful nations to limit the economic fallout from the war. Reeves is expected to this week announce the next phase of support for British households and businesses to soften the impact. However, bosses warned the damage from the Middle East conflict was steadily rising."

"A separate report from the Chartered Institute of Personnel and Development, the professional body for HR, also found that UK employers were prioritising cost management over growth. Almost 60% of employers cited costs as their key priority as rising energy and supplier bills compound higher labour costs prompted by last year's step-up in employer national insurance and increases in the legal minimum wage."

More than two months into the US-Israeli war on Iran, UK employers are increasingly prioritising cost management over growth. Surveys show medium-sized businesses face higher energy and fuel costs alongside supply chain pressures as major challenges. Domestic political uncertainty is adding to hesitation, with businesses holding back investment in Britain. HR-focused research finds nearly 60% of employers cite costs as their top priority, driven by energy and supplier bills, higher labour costs from employer national insurance changes, and increases in the legal minimum wage. Recruitment-focused reporting indicates job creation is under threat, as companies respond to the combined economic shocks and uncertainty.

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