Britain’s businesses have stopped hiring and slipped into “survival mode”, with economic output stuttering to a five-year low in June as the Iran war, weak consumer spending and relentless cost increases combine to squeeze firms from every direction.
The warning comes from consultancy BDO, whose index of economic output slid to 91.53 in June from 94.80 the previous month. That is its weakest reading since February 2021, when the UK was still in the grip of a Covid-19 lockdown.
For small business owners, the most sobering finding is on jobs. BDO’s research indicated that hiring appetite is close to a 15-year low, just as firms absorb the largest increase in operating costs in more than three years.
The price of energy, raw materials and other inputs crucial to goods production has risen sharply since the effective closure of the Strait of Hormuz, which followed the initial US-Israeli strikes on Iran at the end of February. Four months on, the downturn has become far more broad-based, with manufacturing and services both suffering a dismal June.
Scott Knight, head of growth at BDO, said: “Business confidence has remained low for 20 consecutive months as businesses are trapped in survival mode. Rebuilding confidence will need to be tackled immediately by the next prime minister if the UK is to return to growth.”
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