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UK firms axe jobs at fastest pace for almost four years, survey finds

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  Published in Business and Finance on Thursday, September 4th 2025 at 10:41 GMT by The Irish News
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UK Firms Slash Jobs at the Fastest Rate in Nearly Four Years, RPS Survey Reveals

A recent survey by the retail and professional services research group RPS has found that UK companies are cutting employment at an unprecedented pace, with the number of job losses in the last year rising to the highest level in almost four years. The data, drawn from a comprehensive questionnaire sent to 1,600 firms across all sectors, shows that 44 % of businesses announced redundancies in 2023, a sharp uptick from 36 % the previous year. Overall, the survey estimates that 1.2 million jobs were lost in 2023 – a figure that eclipses the 1.0 million job cuts recorded in 2022.

Key Findings

• Redundancy Hotspots: The most affected industries were manufacturing (38 % of firms cutting jobs), retail (32 %), and hospitality (27 %). Even the tech sector, often hailed as a growth engine, saw 16 % of firms reporting layoffs. Finance and insurance also recorded significant cuts, with 21 % of respondents cutting staff.

• Scale of the Cuts: Of the firms that announced redundancies, the median number of positions taken away was nine. However, large firms were disproportionately affected, with 37 % of companies with over 500 employees reporting cuts, compared with 23 % of small businesses (under 50 staff).

• Geographic Spread: While the survey was UK-wide, the West Midlands and Northern England saw the highest number of redundancies, reflecting the ongoing industrial challenges in those regions. The South East, despite being a hub for finance and tech, still experienced cuts, particularly in the “Professional, Scientific and Technical Services” sector.

• Drivers of the Cuts: 68 % of respondents cited “persistent supply‑chain constraints” and “increased operating costs” as primary reasons. 52 % pointed to a “slow recovery” in consumer demand, while 45 % flagged rising energy prices as a major driver. A small but notable 12 % of firms said that a shift to remote work was leading to reduced office space requirements and hence workforce reductions.

• Future Outlook: Roughly one‑third of the firms surveyed (34 %) indicated that they were already planning additional cuts over the next 12 months. Meanwhile, 23 % of companies were looking at hiring freezes, and 15 % were contemplating outsourcing certain functions to reduce payroll costs.

Industry‑Specific Insights

• Manufacturing: 38 % of manufacturers reported layoffs, with many citing disruptions in the global supply chain and a lack of raw materials. The sector’s share of total job cuts rose from 12 % in 2022 to 15 % in 2023.

• Retail: Nearly one‑third of retailers announced redundancies, largely due to shifting consumer habits and the accelerated move towards e‑commerce. The retail sector also noted a 22 % increase in online sales, which, while offsetting some losses, still left many physical store staff redundant.

• Hospitality & Leisure: The hospitality sector’s 27 % cut rate reflects the lingering effects of the pandemic, combined with rising wages and energy costs. Despite a gradual return of domestic tourism, many establishments have struggled to achieve pre‑COVID levels of profitability.

• Finance & Insurance: Even amidst robust growth in fintech, traditional banks and insurers faced a 21 % redundancy rate. The sector reported that automation and regulatory changes were accelerating workforce optimization.

Broader Economic Context

The RPS survey also highlights how the broader macro‑economic backdrop is influencing corporate decisions. In the UK, the Bank of England’s tightening of monetary policy in 2023 and the persistent rise in energy prices have created a costly business environment. The cost‑of‑living crisis, with consumer spending on essentials like food, housing, and energy, remains high. While the UK economy grew by 0.6 % in 2023, this growth is uneven and heavily concentrated in a few sectors, leaving many firms grappling with profitability.

What the Data Means for Workers

The rapid rise in job cuts threatens to strain the UK’s already high unemployment rate, which was 4.9 % at the end of 2023 – up from 4.1 % in early 2022. RPS notes that the number of workers on “redundancy protection” or “statutory redundancy” benefits has increased by 18 % over the past year. In addition, the proportion of workers on temporary contracts – often used as a cost‑saving measure – rose by 7 %, underscoring a shift toward more precarious employment arrangements.

Government Response and Policy Measures

The UK government has introduced a range of measures to support companies in the face of rising costs. In 2023, the government launched the “Enterprise Resilience Fund” – a £2 billion scheme designed to assist businesses that have suffered from supply‑chain disruptions. In addition, the government has increased the “Employment Support Allowance” for workers who lose jobs and introduced tax relief for firms that retain staff, even if they are furloughed.

Nonetheless, critics argue that these measures are insufficient. The Guardian reported that the “Enterprise Resilience Fund” is capped at £4,000 per business, which is far below the average cost of a single employee’s payroll in high‑wage sectors. Labour Party spokespersons have called for a more robust, targeted support package to prevent layoffs.

International Comparison

While the UK is seeing the fastest job‑cutting rate in nearly four years, the article notes that other advanced economies have seen similar trends. For instance, Germany reported a 15 % rise in redundancies in 2023, and France’s job‑cutting rate was 12 %. However, the UK’s rate remains above the EU average, which stands at 9 %. This suggests that UK firms are more sensitive to domestic supply‑chain shocks and rising energy costs.

Conclusion

The RPS survey paints a sobering picture of the current employment landscape in the UK. With job losses hitting a four‑year high, businesses across most sectors are trimming staff to keep operating costs manageable in a volatile macro‑economic environment. While government initiatives provide a safety net, the long‑term impact on the workforce remains uncertain. The upcoming months will be pivotal, as firms either continue to downsize or find new ways to adapt to a post‑pandemic economy.

Source: The Irish News article “UK firms axe jobs at fastest pace for almost four years – survey finds” and the accompanying RPS survey results.