Companies across the United Kingdom are preparing to cut jobs or recruit fewer employees in anticipation of increased National Insurance payments and wages set to take effect in April. The Chartered Institute of Personnel and Development (CIPD) surveyed 2,000 firms, revealing that over a third of these companies plan to reduce their headcount through redundancies or by limiting recruitment. This development comes ahead of the latest official employment figures, which are expected to be released on Tuesday, followed by inflation data on Wednesday.
A significant 42% of companies have indicated plans to raise their prices to offset the growing employment costs. Additionally, a quarter of the surveyed businesses are either cancelling or scaling back their investment and expansion initiatives. The CIPD's small business index highlights that small firms are "braced for a contraction in the size of their business in the first three months of 2025."
"Our data shows it's the everyday economy sectors, such as retail and hospitality, which employ large numbers of people, that will be particularly affected by impending increases to employment costs." – Peter Cheese, chief executive of the CIPD
The Federation of Small Business has also voiced concerns, citing a decline in confidence among small firms across various sectors. Separate research by the Federation found that confidence levels have plummeted to their lowest point in a decade, excluding the Covid pandemic period.
"braced for a contraction in the size of their business in the first three months of 2025" – The Federation of Small Business
The Treasury has stated its commitment to providing the stability businesses need to invest and grow. However, a group of the UK's largest retailers has warned that High Street job losses are "inevitable" due to tax hikes outlined in the Budget, alongside other rising costs.
"inevitable" – a group of the biggest retailers in the UK
These retailers have urged the Treasury to reassess some of these measures, as they believe that the Budget changes and existing policies will impose a "cumulative burden," adding billions in expenses to what is already a low-margin sector.
"cumulative burden" – a group of the biggest retailers in the UK