City snapshot: UK employers weigh up wave of redundancies to cope with tax rises

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Businesses across the UK are scaling back on hiring new staff and stepping up redundancy programmes in reaction to the fresh wave of employment taxes following the Labour budget, according to a new survey released this morning.

The survey of more than 2,000 employers by the Chartered Institute of Personnel and Development (CIPD) found redundancy intentions hit a 10-year high as businesses sought ways to manage the impending increases to employer National Insurance contributions and the national minimum wage.

Almost a third (32%) surveyed plan to reduce their headcount through redundancies or recruiting fewer workers.

And one in four employers plan to make redundancies in the three months to March 2025 – an increase from 21% in the last quarter.

“These are the most significant downward changes in employer sentiment we’ve seen in the last 10 years, outside of the pandemic,” said Peter Cheese, CEO for the CIPD.

“Employer confidence has been impacted by planned changes to employment costs, and employment indicators are heading in the wrong direction. Businesses have had time to digest these impending changes, with many now planning to reduce headcount, raise prices and cut investment in workforce training.”

When asked how they plan to respond to increased employment costs, 42% of employers said they plan to raise prices, rising to 68% of retailers.

This week in the City

There is very little scheduled for this half-term week for food & drink on the markets.

Tomorrow sees Irish ingredients group Kerry reporting full-year results and, on Wednesday, we get the latest UK inflation figures from the ONS.