- Sharp rises in borrowing costs prompt spike in redundancies
The number of planned redundancies in the UK has increased 54% in 2022/2023, year ending July 31, rising from 153,635 to 237,017, says GQ|Littler, the specialist employment law firm.
Employers have indicated their intention to cut jobs as the impact of fourteen consecutive interest rate rises gradually piles on the pain 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 2022/2023, due in part to 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 a Big Four company announcing its plans to cut 5% of its UK-based financial services consulting wing.
Businesses have also had to contend with high wage growth, with ONS stats showing a 7.8% increase in the UK basic wage between April and June 2023. This rose to 9.4% amongst finance and business professionals.
Caroline Baker, Partner at GQ|Littler says: “Businesses are beginning to feel the full effects of the current interest rates cycle. Wage increases are also putting pressure on bottom lines even as overall inflation falls. 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.”
*Year-end July 31st 2023
