17 February 2025, 09:13 | Updated: 17 February 2025, 09:34

UK employers are readying for mass redundancies amid collapsing business confidence, in what’s been described as the biggest round of layoffs in nearly a decade.

Reports of firms preparing for mass layoffs come as UK businesses brace for major tax hikes from April, following Rachel Reeves’ plans for National Insurance hikes for employers in her autumn budget.

Figures released by the Chartered Institute of Personnel and Development (CIPD), which represents HR professionals, said a recent survey of 2,000 employers revealed planned redundancies had hit their highest level in 10 years.

The figures exclude redundancies that came as a result of the Covid pandemic.

The CIPD survey, which was carried out in the second half of January, found that most employers blamed the rise in employer NI contributions, alongside a 6.7% increase in the “national living wage”.

It added that its study highlighted the Government’s need to accelerate its business support plans and skills policy.

A third of businesses that expect their employment costs to increase said they plan to reduce their headcount through redundancies or recruiting fewer workers – and two in five warned they will raise prices.

Peter Cheese, chief executive at the CIPD, said: “These are the most significant downward changes in employer sentiment we’ve seen in the last 10 years, outside of the pandemic.

“Employer confidence has been impacted by planned changes to employment costs, and employment indicators are heading in the wrong direction.

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“Businesses have had time to digest these impending changes, with many now planning to reduce headcount, raise prices and cut investment in workforce training.

“If the Government’s plans are to succeed, it’s vital they set out how they will help businesses to support growth and investment, and it’s important this support is felt across the economy.

“Our data shows it’s the everyday economy sectors, such as retail and hospitality, which employ large numbers of people, that will be particularly affected by impending increases to employment costs.”

It comes as a separate survey found that confidence among small businesses hit its lowest recorded point outside the Covid pandemic in the fourth quarter of last year.

The Federation of Small Businesses (FSB) said a survey of almost 1,400 smaller firms found that those in accommodation and food services were the least optimistic.

Barriers to growth were said to include the domestic economy, the tax burden and labour costs.

Tina McKenzie, of the FSB, said: “The fourth quarter blues reported by small firms underline how urgently the Government’s growth push is needed.

“Small firms are understandably nervous about their prospects as 2025 gets under way.

“The upcoming Employment Rights Bill is a major source of stress for small firms, with nine in 10 business owners saying they are concerned about its introduction, and this is undoubtedly a major cause of the very subdued confidence levels seen in our research.

“On the plus side, the Government’s plans to reduce late payment – a perennial source of financial pain and misery to small firms – cannot come soon enough.”

Paul Nowak, general secretary of the TUC, said: “Many of the warnings being issued against the Employment Rights Bill are the same discredited ones that were voiced against the introduction of the minimum wage 25 years ago. They were wrong then and they are wrong now.

“We cannot continue with the same broken status quo.

“Britain’s low pay, low rights economic model has been terrible for living standards and growth over the last 14 years.

“The Government’s workers’ rights plans are common sense reforms that will drive up labour market participation, improve health, raise productivity – and put more money into people’s pockets.

“They are good for workers, business and the wider economy.”