Companies are cutting jobs at the fastest pace since the global financial crisis, barring the pandemic, after Rachel Reeves announced £40bn of tax rises in the Budget, according to a closely watched survey. Employment levels among private sector businesses fell for the fourth month in a row in January, according to the S&P Global Flash UK purchasing managers index (PMI).
Bosses said the Chancellor’s impending £25bn hike in National Insurance had prompted companies to cut back their recruitment plans. It comes a day after Sainsbury’s announced it will slash 3,000 jobs just weeks after its chief executive warned over the impact of the Chancellor’s tax raid.
Chris Williamson, chief business economist at S&P Global, said: “The loss of confidence, combined with widespread concerns over higher staff costs associated with the Budget, pushed employment sharply lower again. “Barring the job cutting seen during the pandemic, the rate of job losses signalled by the PMI over the past two months has been the highest since the global financial crisis in 2009.”.
Elliott Jordan-Doak of Pantheon Macroeconomics warned the PMI figures show the Bank of England “cannot fully react to slowing growth because price pressures are surging, as firms pass on payroll tax hikes aggressively into prices as well as cutting employment”.
