Planned redundancies up 60 per cent as firms feel pressure of interest rate rise and borrowing costs
Raised interest rates and borrowing costs have led to a 60 per cent increase in planned redundancies.
The spike in people losing their roles went up from almost 38,000 to more than 60,000 in the last quarter according to GQLitter, a specialist law firm dealing with employment.
This comes after interest rates were increased 1 per cent in May, the highest since 2009, amid a soaring cost of living crisis.
There was also a hangover effect from the pandemic, with many businesses borrowing cash to get them through numerous lockdowns.
“UK businesses, many of which took on additional debt to help them through the pandemic, are now suffering the consequences of increased borrowing costs”, Raoul Parekh, Partner at GQ|Littler said.
He added that “companies are looking at where they can reduce costs, including within their wage bills” and firms which “put off difficult decisions on controlling staff costs may have decided they can no longer afford to delay.”
The rising cost of energy and uncertainty about the cost of living, including the war in Ukraine, exacerbated this problem, forcing them into cutting costs.
“For most employers, these redundancy programmes are a last resort as they had been very careful not to let surplus staff go during the so-called ‘Great Resignation’.”