Reeves Budget Stokes Unemployment Increases to 4.4%

In the immediate aftermath of Rachel Reeves’ Autumn Budget 2024 and the announcement of Employers National Insurance Contributions (NIC) being increased to 15% from 13.8% and the Secondary Earnings Threshold (the point at which Emplorers NIC) being reduced from £9,100 pa to just £5,000 pa in addition to the increase in National living and National minimum wage meaning employers must pay more and the side hassle that this also means even bigger employer pension contributions, we warned you to::

• Expect lower recruitment and lower business expansion.
• Expect redundancies.
• Expect lower or even no pay rises (over and above National Living Wage).
• Expect other employer benefits to improve such as bigger employer pension contributions or more staff leave/holidays or greater flexible working opportunities.
• As a last resort, expect some larger employers to shift call centres, servicing, or production overseas.

See:  Budget 24 Income Tax & NIC

Job Loss Headlines This Week

• Office for National Statistics reports that unemployment increased to 4.4% of working age population with employment falling by 32,000 September to November 2024.  In addition, job vacancies are down 24,000.
• Which? Spends £1.2m on 26 redundancies.
• Companies Slashing Jobs at Fastest Rate Since 2009.
• Morrisons laying off 200+ staff members.
• Jaguar Land Rover Faces Up to 200 Voluntary Redundancies.
• River Island is making job cuts.
• Sainsbury's Cafes closing as 3,000 job cuts announced.
• Newcastle University set to axe around 300 jobs in £20 million staffing cuts.
• Gloucestershire police anticipate staff redundancies.
• Schuh Staff at Scottish-headquarter raft of job cuts.
• Starbucks plans to announce corporate layoffs by early March.
• BP announces 4,700 job cuts.
• Welsh theatres warn of closures and job cuts.
• Asda confirms new round of job cuts after worst Christmas in nearly a decade.
• Microsoft staff face second round of layoffs as firm continues cost-cutting measures.
• Meta Layoffs Incoming As Zuckerberg Predicts “Intense Year”.

Comment

We won’t say we told you so, but employers are now reacting as expected and the ‘length of fuse on the bomb is burning away quickly and could explode without intervention’. 

We cannot say it is all Rachel Reeves’ Budget that has caused it all as there are global headwinds for economic slowdown and trade war but will she ‘back track’ and make it a little easier for UK employers, we think not, it may be the Bank of England intervenes with interest rate cuts on the 6 February 2025 to tries and slow down the UK’s current recession ‘heading’ trajectory.

We forecast recession for 2025 last year and it is clear it could be a very difficult year.