UK Businesses Brace for Higher Taxes and Job Cuts

UK businesses are facing significant challenges as they prepare for tax changes that will increase employer national insurance contributions (NICs) and the national minimum wage in April. Surveys indicate that more than two-thirds of hospitality businesses plan to cut staffing due to these higher costs, while others are canceling investment plans. The S&P Global Purchasing Managers' Index (PMI) shows the sharpest decline in employment since November 2020, raising concerns of a stagflationary environment with slow growth and rising inflationary pressures. The PMI data also reveals a slight growth in the services sector, although manufacturing continues to decline. Economists warn that the UK economy is stalling, with job losses mounting amid increased payroll costs and weak demand. The Bank of England faces a dilemma as it navigates through these economic pressures, having recently lowered interest rates but remaining cautious about future moves.