UK job cuts on the rise as growth weakens
UK staffing numbers fell at their fastest pace since February, reflecting a ‘sustained culling of jobs’ amidst weakening growth and a fragile domestic economy.
The S&P Global Flash UK PMI for July 2025 shows that private sector output continues to increase, but the rate of growth has slowed significantly with new work declining.
According to the data, the increasing number of job cuts is a response from the private sector to reduced customer demand and higher payroll costs, the latter of which has been influenced by Rachel Reeves’ last Autumn budget that raised the National Insurance rate paid by employers.
Service providers cited fragile domestic economic conditions and geopolitical uncertainty as having a negative impact on sales. The new work being received by UK private sector firms has also begun to decline again, with the survey measuring the sharpest decline in new orders across the service economy since April.
Private sector firms surveyed said that, on balance, they continue to anticipate a rise in business activity during the next 12 months, but confidence remains subdued in comparison to the post-pandemic trend.
Respondents said they were hoping for pent-up customer demand to break through, along with lower borrowing costs, and a return to higher global investment spending.
However, the survey found many respondents worried over unfavourable domestic economic conditions, geopolitical
instabilities and global trade uncertainties.
“The flash UK PMI survey for July shows the economy struggling to expand as we move into the second half of the year. Output growth weakened to a pace indicative of the economy growing at a mere 0.1% quarterly rate, with risks tilted to the downside in the coming months,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
“The sluggish output growth reported in July reflected headwinds of deteriorating order books, subdued business confidence and rising costs, all of which were widely linked to the ongoing impact of the policy changes announced in last autumn’s Budget and the broader destabilising effect of geopolitical uncertainty.”
“Particularly worrying is the sustained impact of the Budget measures on employment. Higher staffing costs have exacerbated firms’ existing concerns over payroll numbers in the current environment of weak demand, resulting in another month of sharply reduced headcounts in July,” he said.
“The weak growth trajectory and sustained culling of jobs will add to pressure on the Bank of England to cut rates again at its next policy meeting in August.”
