Loyal but frozen: 82% of UK business leaders rule out leaving Britain, but half have paused hiring
UK business leaders are staying put and standing still. More than four in five (82%) say that relocating themselves or their headquarters outside the UK is very unlikely, yet more than half (51%) have slowed, paused or reduced hiring as a direct result of tax and regulatory pressure, according to new quarterly data from CEO coaching and peer advisory firm Vistage.
The organisation’s CEO Confidence Index sets out the economic baseline facing prime minister Andy Burnham’s government as it prepares its promised “circuit breaker” economic strategy. The findings describe a mid-market that is refusing to retreat from the UK, but is holding back on expansion until it has long-term fiscal clarity.
Mid-sized business leaders have largely decoupled their own ambitions from the wider economic backdrop. Six in ten (60%) UK CEOs report that economic conditions have deteriorated over the past year, with just 7% seeing an improvement. Despite that, 61% expect their own sales revenue to grow over the next 12 months and 43% forecast higher profits. Rather than relying on market tailwinds, they are backing their own internal capability to push top-line performance.
That self-reliance is being tested by a profit squeeze closing in from both sides. More than four in five (84%) CEOs report substantial or moderate increases in input costs. At the same time, two thirds (67%) say their customers have become significantly more price-sensitive. With buyers resistant to price increases, business owners are absorbing those rises themselves, putting intense pressure on profitability.
The profitability pressure is impacting the leaders themselves. Almost a third (31%) of CEOs say they feel frequently burned out or emotionally exhausted, and a further 33% experience it occasionally: close to two thirds of the senior leadership of the UK mid-market. In response, 93% of firms are now actively investing in manager and leadership development.
Despite mounting frustration with tax and regulatory burdens, UK business leaders show no appetite for a corporate exodus. The frustration is surfacing instead as a quiet operational pause on domestic growth. Alongside the freeze on hiring, a quarter (26%) of leaders have held back or cancelled planned capital investment.
Professor Joe Nellis, economic adviser to Vistage, says: “The new government has inherited an intrinsically challenging landscape. SME leaders have lost confidence in the UK economy, yet they retain confidence in their own operations. They are not looking for handouts and they are not planning to leave for greener pastures. Instead, they’re backing themselves to drive business growth while staying loyal to the UK.
“That may sound positive, but self-reliance only stretches so far when margins are restricted. Caught between persistent input inflation and buyers who will not absorb it, business leaders are being forced into hedging mode. The real risk is the quiet freeze on domestic ambition. Employers tell us that tax friction, and employer’s National Insurance in particular, is the single biggest drag on recruitment and workforce expansion. Without hiring, growth is all but impossible.
“If the government is to deliver on the circuit breaker and transform business confidence, it must remove those underlying obstacles and create an environment in which investment is attractive. Fiscal stability, and a lighter penalty on employment, would give SME leaders the confidence to invest here rather than wait.”
Emma van Rooyen, managing director of Vistage UK & Ireland, adds: “What our members describe is not pessimism. It is caution held for too long. The businesses that come through this will be the ones that keep making decisions while the picture is still unclear, and very few leaders can do that on their own. Close to two thirds of the CEOs in this data are running on empty, and 93% of their firms are investing in leadership development because they can see what that costs. Leadership at this level was never meant to be a solo job.”