UK Firms Sharpen the Axe as Tax Hikes Loom

📰 Industry News

Here's a roundup of this week's top headlines shaking up the UK business world.

• HSBC is set to axe a number of investment bankers this Friday whilst rewarding some with bonuses. A source said “some will get a bonus and others will go”. (CITYAM)

• Lidl is to become the first supermarket to sell its products through TikTok Shop from February 20th. (The Retail Bulletin)

• Thames Water has won a crucial High Court battle to secure a £3bn rescue loan, starving off the prospect of the debt-laden company coming under government control. (BBC)

• Calls grow on the Welsh Government to rethink its insistence on taxing children in its Visitor Levy and instead consider the impact this will have on families’ ability to holiday in Wales. (UK Hospitality)

📦 UK Firms Sharpen the Axe as Tax Hikes Loom

Good news – your boss probably isn’t firing you this week.
Bad news – give it a few months.

Business confidence in the UK is dropping faster than your willpower on a Friday night. Redundancies are on the cards, with employers preparing for the biggest round of job cuts in a decade outside Covid – and no, it’s not just because Dave in accounts finally pushed everyone over the edge.

Tax hikes and wage pressures are biting hard, and surveys suggest firms are more stressed than a Deliveroo driver in rush hour as Rachel Reeves’ autumn budget isn’t exactly winning hearts and minds in the boardroom.

What’s Going On?

• Confidence: A survey by the CIPD found that employer confidence is in the bin, with redundancy plans at their highest level since the pandemic.

• Tax: From April, businesses face higher national insurance bills and a 6.7% jump in the national living wage – great for payslips, less fun for payroll budgets.

• Small Firms: The FSB’s confidence index has hit rock bottom (-64.5 points if you’re into numbers), with hospitality firms basically waving white flags (-111.0 points). It’s a pretty stark read.

What’s Next? 

Inflation’s on the rise again (expected to hit 2.8%), unemployment is nudging upwards (4.5% forecast this week), and businesses are bracing for more pressure. Half of small firms reckon their revenue will fall this quarter. If you work in pubs, hospitality, or anywhere that can’t just “pivot to digital,” it’s looking rough.

My Take:

Tax rises were always going to sting, but this is morphing into a business confidence meltdown. Employers are panicking, and workers are bracing. Reeves needs to throw businesses a bone – fast – or we’ll be adding ‘redundancies’ to our weekly shopping lists.

📦 Wages Go Up - But For How Long?

Good news - Your pay packet might actually be stretching further than a week’s shop at Tesco for once.

Bad news - Businesses are sweating over upcoming cost hikes, and the “good times” could be on borrowed time.

Wages in the UK are finally growing faster than inflation – but with National Insurance jumps, minimum wage hikes, and energy bills creeping up, some firms are eyeing the “cut costs or raise prices” button. Feeling richer? Or just waiting for the other shoe to drop? Here’s what I think.

What’s happening:

• Wages vs Inflation: Real pay rose by 3.4% from October to December 2024, meaning wages finally outpaced inflation – the best growth in over three years.

• Business Jitters: From April, employers face a National Insurance hike (up to 15%), minimum wage rises, and reduced business rates relief – triggering concerns over job cuts and price hikes.

• Hiring Slowdown: While the number of people on payrolls edged up by 21,000 in January, overall job vacancies fell 11.8% compared to last year, suggesting businesses are pausing recruitment.

Why It Matters:

Sure, a bigger pay packet feels great – until your local café starts charging £5 for a latte to cover their NI bill. Businesses are warning that these cost pressures could stall wage growth and lead to price hikes (hello, inflation) or even job cuts. So, while your salary might finally be keeping up with your bills, the battle between pay and prices isn’t over. Keep celebrating the pay bump – but maybe don’t splash out on that new office chair just yet.

🌎 From Across The Pond

TikTok’s dodged another bullet – back on the shelves after a Trump-era ban scare – but the app’s still got Uncle Sam breathing down its neck over security concerns. Jury’s out on whether it’ll survive the next political mood swing.

Meanwhile, KFC’s doing the unthinkable: packing up its Kentucky HQ and heading for… Texas. Bit like Greggs moving to Paris, isn’t it?

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