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Half of business leaders have paused hiring due to tax pressure, study finds

Despite these challenges, 82% said relocating themselves or their headquarters outside the UK was "very unlikely".

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Half of business leaders have paused hiring due to tax pressure, study finds
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More than half of UK business leaders have slowed or paused hiring because of tax and regulatory pressures, despite the vast majority ruling out relocating their business outside the UK, according to research from Vistage.

The CEO coaching and peer advisory firm’s latest CEO Confidence Index found that 51% of mid-market business leaders have slowed, paused or reduced recruitment as a direct result of tax and regulatory pressures.

Despite these challenges, 82% said relocating themselves or their headquarters outside the UK was “very unlikely”, suggesting firms remain committed to operating in Britain but are holding back on expansion until there is greater long-term fiscal certainty.

The findings come as Prime Minister Andy Burnham prepares to unveil his proposed “circuit breaker” economic strategy.

The research also found that 60% of CEOs believe economic conditions have deteriorated over the past year, while just 7% said they had improved.

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However, business leaders remained optimistic about their own organisations, with 61% expecting sales revenue to grow over the next 12 months and 43% forecasting higher profits.

Cost pressures continue to weigh on businesses.

More than four in five (84%) CEOs reported moderate or substantial increases in input costs, while 67% said customers had become significantly more price-sensitive, limiting their ability to pass on higher costs.

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The pressure is also affecting investment decisions, with 26% of respondents saying they had delayed or cancelled planned capital investment.

The research highlighted growing concerns around leadership wellbeing, with 31% of CEOs saying they frequently feel burned out or emotionally exhausted, while a further 33% experience burnout occasionally.

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In response, 93% of firms said they are investing in manager and leadership development.

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Professor Joe Nellis, economic adviser at Vistage, said: “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.”

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Emma van Rooyen, managing director of Vistage UK & Ireland, added: “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.”

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