The analysis provided by S&P Global Flash paints a bleak picture of the UK economy (Image: Getty)
Employment levels have decreased for the fourth month running as employers begin to feel the pressures arising from business killing budget.
The analysis provided by S&P Global Flash UK purchasing managers index (PMI), shows that staffing numbers have continued to trend downwards, having first begun to decrease in October 2024, the month that raised the cost of doing business in the UK.
Chris Williamson, chief business economist at S&P Global Market Intelligence said: “The first indicators of business conditions in 2025 add to the gloom about the UK economy, with companies cutting employment amid falling sales and concerns about business prospects.
“The loss of confidence, combined with widespread concerns over higher staff costs associated with the Budget, pushed employment sharply lower again.
“Barring the job cutting seen during the pandemic, the rate of job losses signalled by the PMI over the past two months has been the highest since the global financial crisis in 2009.”
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Employment figures have declined for the fourth consecutive month (Image: Getty)
Elliott Jordan-Doak of Pantheon Macroeconomics warned the PMI figures show the Bank of England “cannot fully react to slowing growth because price pressures are surging, as firms pass on payroll tax hikes aggressively into prices as well as cutting employment”.
He added: “The MPC has to plot a middle ground, keeping growth weak enough to bring inflation back to target in a reasonable time but without cratering the economy and undershooting the inflation target.”
The Chancellor’s saw the national living wage rise whilst employers were further hit by increased national insurance contributions and a lowering of the threshold at which they being to be paid.
The UK economy has also seen an “historic jump” in the number of businesses facing severe stress following budget according to analysts.
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The Chancellor’s budget has been widely criticised for stifling growth in the UK economy (Image: Getty)
Less than three months after the Chancellor for millions, the new figures show businesses in distress “across almost every corner of the economy.”
The analysis by Begbies Traynor shows a worrying surge in the number of businesses in the UK entering “critical” financial distress in the final quarter of 2024.
Ric Traynor, executive chairman of Begbies Traynor, said: “After a historic rise in ‘critical’ financial distress in Q4 2024, it’s clear that many distressed UK businesses are finding it almost impossible to navigate the challenges they face as we start 2025.
“For many businesses which were already dealing with weak consumer confidence and higher borrowing costs, the increase in national insurance contributions and the national minimum wage, announced at the last Budget, could be the last straw, particularly in labour-intensive sectors like retail and hospitality, who typically operate on razor thin margins.”