UK tax hikes dampen hiring as businesses cut jobs

Nearly one-third of UK small and medium-sized enterprises (SMEs) have reduced their workforce in recent months, with major corporations also warning of potential layoffs amid rising social security costs, industry experts report.

A survey by the British Chambers of Commerce (BCC) revealed that 13% of the 570 CEOs polled have already downsized their teams, while another 19% are considering cuts due to higher employer social security contributions. The policy, enacted in April under Chancellor Rachel Reeves, is now starting to strain businesses, as the organization notes.

Shevaun Haviland, CEO of the BCC, says companies were caught off guard by mounting financial pressures, leading to a drop in UK business confidence to its lowest level since 2022. In response, many firms have slashed bonuses and begun workforce reductions to cope with the challenging economic climate.