The number of planned redundancies in the UK has jumped 103% in just one month, from 8,869 in January to 18,043 in February, says specialist employment law firm GQ|Littler.
The number of redundancies planned by businesses has increased sharply as interest rates continue to rise. In February the Bank of England made the second of three increases in interest rates – pushing up the cost of borrowing for businesses.
Raoul Parekh, Partner at GQ Littler says: “An extreme shortage of staff and hopes of a post COVID recovery had persuaded businesses to hold off on redundancy programmes, with numbers in December 2021 and January 2022 at their lowest levels since April 2019. It looks like that period of stability might be behind us.
“It’s clear that the Bank of England intends to slow the economy in order to keep inflation under control. Spiralling energy costs and other impacts from the war in Ukraine are also likely to dampen optimism amongst businesses and lead to cost cutting.”
The company feels it’s likely that some businesses are making redundancies in anticipation that consumer spending will drop off in some sectors due to the cost-of-living crisis which is expected to be exacerbated by the rise in National Insurance rates in April.
This climb in the number of planned redundancies comes after months of low redundancy rates.
Mr Parekh adds: “It is not yet clear whether these higher numbers of dismissals will result in higher unemployment, or whether the current labour shortages instead create a higher sectoral churn. Given the attention paid to P&O’s mishandled redundancy programme employers will want to ensure that any similar measures are undertaken with extreme care and as sympathetically as possible.”
