Deloitte has slashed hiring and cut back on promotions for its most senior staff as it warned an economic slowdown was harming UK investment.

On Tuesday, the accountancy giant revealed it has reduced the number of new recruits joining the firm and promoted fewer managers to partner level amid “continued economic headwinds”.

The move by Big Four accountancy giant comes against a backdrop of weak growth, high inflation and increasingly negative business sentiment ahead of the Budget on November 26.

On Monday, Rachel Reeves warned business leaders at the Labour Party conference that her Budget may once take aim at employers as she refused to rule out another tax raid on corporate Britain.

Addressing a Confederation of British Industry (CBI) event, Ms Reeves said it was important that Britain’s tax regime was “internationally competitive”.

But asked if businesses had already paid enough higher taxes, she said: “I recognise that we should have a competitive tax system, but I think businesses recognises, like everybody does, that paying taxes is important to support the economy.”

Businesses at the conference in Liverpool suggested there had been a failure by the Government to spot the challenges facing the economy.

“It’s dismal,” said one business leader. “The threat of more to come has left many living in fear of what’s around the corner. Nobody is investing.”

Another executive warned that Ms Reeves had “cast us on a cause of doom”.

“They’re incapable of cutting public spending, philosophically, but they can’t raise tax and have economic growth at the same time,” they added.

Ms Reeves said she recognised things will be tough, telling the CBI: “I’m not saying that my Budget will be easy, but we will get through the budget, whereas other countries have been struggling.”

Deloitte’s cuts highlight some of the malaise caused by Ms Reeves’s policies. As one of the country’s largest professional services firms, it is a significant bellwether for the UK economy and the thousands of small enterprises it serves.

Annual results showed the group hired just 3,160 new staff for the year ending May 2025 – a 7pc decline on last year and a 53pc cut from 2023’s intake.

Fewer senior managers were also promoted, with 5,500 made partners last year versus 6,800 2024 and 7,400 in 2023.

Richard Houston, chief executive of Deloitte UK, said: “Geopolitics and continued economic headwinds meant that many organisations have been carefully managing their costs and delaying certain investments.

“In light of this, we have had to review and make changes to the shape of our firm, but we’ve remained resilient with notable client successes across our businesses.”

Deloitte reported a 1pc fall in revenues to £5.68bn. A sharp downturn in sales from its consulting arm, which contributes half of its annual revenues, drove the decline.

Profits rose by to £789m because of lower costs, while partners took away average payouts of £1.05m each – up 4pc on the £1.01m from last year.

Sharp reductions in the size of Deloitte’s entry-level recruitment schemes also contributed to the reductions in firm-wide recruitment efforts.

The firm took on the smallest cohort of new graduates, interns and apprentices since Covid, recruiting just 1,900 new hires versus 2,150 last year.

The slowdown in revenues was mainly driven by a 10pc slump in sales from Deloitte’s ‘technology & transformation’ division, which is focused on selling advice on IT systems and is the largest individual segment of Deloitte’s business.

Lower revenues from Deloitte’s tech-focused consulting arm were partially offset by a 7pc increase in sales from its tax & legal division and a 3pc rise in sales from its audit business.

Underscoring business fears, the British Retail Consortium (BRC) on Monday warned Ms Reeves that imposing further tax hikes on businesses would lead to higher prices.

Helen Dickinson, the chief executive, said: “While retailers continue to absorb higher costs as much as possible and deliver value to customers, any further tax rises in the upcoming Budget would keep shop prices higher for longer.”

Shop price inflation rose to 1.4pc in September, up from 0.9pc in August, while food inflation remained at 4.2pc, unchanged from a month earlier.

Concerns about further tax increases come as UK business confidence fell to 42pc in September, according to Lloyds Bank’s business barometer, down from 54pc a month earlier.

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