(Bloomberg) — UK businesses have run down a mountain of cash reserves built up during the pandemic, leaving them more likely to cut jobs when Labour’s tax hikes come into effect in April.

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Firms added over £150 billion ($185 billion) to their savings when the economy was placed under Covid restrictions, thanks to a mix of loans and large-scale public-sector support. Corporate coffers reached almost double the value of their quarterly wage bills, according to a Bloomberg analysis of official data.

However, most of those excess reserves are now gone. Firms tapped into them during the cost-of-living crisis to keep up with inflation-busting pay rises, including double-digit increases in the minimum wage, and high borrowing costs. The ratio of savings to payroll bills is now back to its pre-pandemic level of just above 1.5.

“It’s the corporate equivalent of households’ excess savings being eroded by high inflation last year,” said Matt Swannell, chief economic adviser to the EY ITEM Club. “With some reserves, it’s easier to keep hold of staff even if they are expensive. In real terms though, if your savings have depleted, that becomes harder to do.”

Businesses complained vociferously after Chancellor of the Exchequer Rachel Reeves increased a payroll tax by around £26 billion a year in her Oct. 30 budget. Reeves has insisted the tax rise will go ahead in April, blaming the previous Conservative government for leaving a £22 billion hole in the public finances.

Firms have already started to reduce headcount, as they brace not only for the hike in national insurance contributions, but also a third consecutive increase in the minimum wage that also takes effect in April.

The pace of job-cutting in January and December was the fastest since the wake of the financial crisis, barring the pandemic, according to a purchasing-management survey published by S&P Global on Friday. A day earlier supermarket giant J Sainsbury Plc announced 3,000 roles are to go — including a 20% reduction in senior management — and that all of its remaining in-store cafes will close.

HM Revenue & Customs data through December show private-sector employers have shed over 150,000 employees since Labour took office last July, including 70,000 since the budget. Workers in hospitality, retail and manufacturing have borne the brunt.

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