There has been a sharp rise in the number of planned redundancies in the UK, employers have indicated.
As of 31 July the number has been calculated at 237,017, compared with 153,635 at this stage last year, said employment law firm GQ|Littler.
Employers have signalled their intention to cut jobs as the impact of 14 consecutive interest rate rises gradually adds to costs for businesses. Since December 2021, the Bank of England has raised rates from 0.1% to 5.25%.
The financial services sector has seen a 36% increase in planned redundancies, which rose from 39,389 in 2021/22 to 53,739 in 2022/23, partly because of the slowdown in the investment banking market as interest rates rose. 2023 saw the rescue of Credit Suisse by UBS.
Professional service firms have also been impacted by the downturn, with EY, one of the big four companies, announcing its plans to cut 5% of its UK-based financial services consulting wing.
Spike in redundancies
Businesses have also had to contend with high wage growth as they sought to offer competitive salaries as inflation rose. ONS stats show a 7.8% increase in the UK basic wage between April and June 2023. This rose to 9.4% among finance and business professionals.
Caroline Baker, partner at GQ|Littler says: “Businesses are still being careful not to let too many staff go but the statistics show that the job market is beginning to slow.”
“Employers should be approaching redundancy programmes with utmost sensitivity. Processes that have been rushed or otherwise poorly executed can have a lasting negative reputational impact.”
The retail sector is also planning to axe jobs and cut investment in the coming months in response to a deepening slump in spending by consumers, a snapshot of high street and online activity has shown.
Employers’ organisation the CBI said this week that its barometer of retail activity had fallen for a fourth month in a row in August to stand at its lowest level since March 2021.
Retailers saw no relief from the poor trading conditions over the coming months and were cutting back on orders with suppliers, the CBI said, adding that retail sales in August fell at their quickest pace in over two years.
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Martin Sartorius, a principal economist at the CBI, said: “Retailers foresee cuts to investment over the next year, while employment is expected to fall again next month.”
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