Blow for Reeves as McDonald’s UK boss warns ‘it’s hard to do business’ | City & Business | Finance

The head of McDonald’s in the UK has pledged to continue investing in restaurants and employees despite issuing an ominous statement on the fierce “headwinds” compelling many businesses to slash costs and reduce their workforces.

Lauren Schultz, chief executive of McDonald’s UK & Ireland, said the group had maintained its recruitment levels in the face of rocketing wage costs, with between 70 and 130 members of staff still employed per restaurant.

However, in what will be interpreted as a warning for Chancellor Rachel Reeves, Schultz highlighted that challenging trading conditions were heaping pressure on businesses.

She said: “It’s hard to do business right now.

“Whether down to the consumer, or the number of competitors out there.”

She added: “In this headwind-rich environment, people who run businesses not the way we do might contract and pull back to manage costs.”

Does MacDonald’s do work experience placements?

But she insisted that “cost savings never lead to growth”.

“When you invest in your people… you drive better business outcomes.”

Her remarks came as the group announced a paid work placement scheme to provide a “foot in the door” for 2,500 young people as they face dwindling employment prospects.

The fast food giant is launching what it describes as the UK’s largest ever in-person work experience initiative, in a bid to help address rising youth unemployment.

However, the news that such a huge UK employer has underwritten the difficulty in doing business in Britain is a crushing blow for the Chancellor, who said she would make employment and growth key priorities when she took up office.

How many people work for MacDonald’s?

McDonald’s employs around 100,000 workers under the age of 25, with one in three managers under 25 years old.

Ms Schultz said many young people lack the work experience necessary to enter the workplace and hopes the work placement programme will give them a head start.

“They want to be in the workforce, but they can’t get any work because they don’t have that experience,” she told the Press Association.

A survey commissioned by McDonald’s for its inaugural Youth Confidence Index found that more than two thirds (67%) of young people would like to do work experience, but 69% said there is a lack of placements in their local area.

More than 60% (61%) also said they cannot afford to do unpaid work experience.

Why is it so hard to do business in the UK?

Rachel Reeves is facing the full weight of the economic damage inflicted by the Iran war, in addition to presiding over historically high levels of taxation and welfare spending, which critics say is creating a “doom loop” of low consumer spending, increased business closures and rising unemployment.

Just over a week ago, the IMF confirmed the UK’s economy was singularly exposed to decline. The influential body downgraded Britain’s growth forecasts, warned of surging inflation and predicted rising unemployment — singling out the UK as one of the nations hardest hit by fallout from the conflict, which threatens to tip the global economy into recession.

How bad is the UK economy?

GDP is now forecast to grow by just 0.8% this year, recovering to 1.3% in 2027. As recently as January, the IMF had projected 1.3% growth this year and 1.5% next — figures that now look distant.

The UK economy grew by a lacklustre 1.4% last year.

On inflation, the IMF expects prices to average 3.2% this year and 2.4% in 2027 — sharply above its earlier projections of 2.5% and 2% respectively. Higher energy bills, dearer fuel and rising food costs are all expected to keep inflation elevated in the wake of the conflict. Petrol prices have already jumped 19% since the fighting began, with diesel up by more than a third.

Unemployment is forecast to climb from 4.9% last year to 5.6% this year, adding further pressure on households already squeezed by rising living costs.