British businesses cut jobs last month at a rate not seen outside the pandemic since 2009, as many companies looked to head off the impact of higher employment taxes and the rise in the National Living Wage due in April.
New flash data from S&P Global’s UK purchasing managers’ index (PMI) revealed that private sector employment fell sharply in February, with nearly one in three businesses reporting lower staffing levels. Those respondents directly linked the cuts to policies announced in last October’s Budget, when Chancellor Rachel Reeves introduced a £25 billion National Insurance hike and confirmed that the legal minimum wage would climb for many age brackets from April.
Chris Williamson, chief business economist at S&P Global, said: “Employment fell sharply again in February, dropping at a rate not seen since the global financial crisis if pandemic months are excluded. One in three companies reporting lower staffing levels directly linked the reduction to policies announced in last October’s Budget.”
While the PMI data also indicates that overall private sector growth softened slightly in February, wage pressures continue to drive up average cost burdens. According to S&P Global, operating costs grew at the fastest pace in 21 months, compounding the labour cost concerns of companies already bracing for higher tax bills and statutory pay obligations.
The resulting job cuts underline the challenges facing businesses in multiple sectors as they navigate both global headwinds and domestic fiscal changes. Many employers appear to be proactively adjusting headcount ahead of the higher wage floor and the sizeable National Insurance hike.
Support authors and subscribe to content
This is premium stuff. Subscribe to read the entire article.
