UK Firms Cutting Jobs at Financial Crisis Pace, Survey Shows

UK Firms Cutting Jobs at Financial Crisis Pace, Survey Shows

(Bloomberg) — Stagflation fears stalked Britain at the start of 2025 with a closely watched survey showing jobs being slashed at a pace seen in the aftermath of the financial crisis and price pressures building.

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S&P Global said its composite purchasing manager index edged up to 50.9 in January from 50.4 in December. It was slightly better than economists’ expectations, yet remained only narrowly above the 50 threshold separating growth and contraction.

S&P said the rate of job-cutting in January and December was the fastest since 2009, barring the pandemic. Firms cut headcount for a fourth straight month.

The warning comes days after J Sainsbury Plc, the country’s second-largest grocer, announced 3,000 roles would go — including a 20% reduction in senior management — and that of all its remaining in-store cafes will close.

The survey suggests that gloom still hangs over UK businesses after their confidence was sapped by hefty tax rises in Labour’s first budget and a darkening economic outlook at home and abroad. Separate figures Friday showed consumer confidence fell in January to its lowest level for more than a year.

What Bloomberg Economics Says…

“The January UK flash composite PMI survey suggests activity continued to stagnate going into 2025. While the survey was stronger than expected, it still signaled ongoing weakness, with the further drop in employment levels in the private sector. That reinforces the case for the Bank of England to cut rates in February. We expect a 25-basis-point reduction to 4.50% next month, followed by gradual quarterly cuts to 3.75% by the end of the year.”

—Niraj Shah and Dan Hanson, economists. Click to read REACT on the Terminal

Cost pressures for businesses nonetheless rose at the fastest pace since May 2023, the PMIs showed. Prices charged by firms also climbed at the quickest rate in 18 months.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said inflationary pressures have reignited, “pointing to a stagflationary environment which poses a growing policy quandary for the Bank of England.”

He added that companies have been “cutting employment amid falling sales and concerns about business prospects.”

There were also worrying signs ahead with expectations for activity sinking to the lowest since the aftermath of Liz Truss’ short-lived premiership in late 2022. New work fell at the fastest pace in over a year.

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