UK Firms Cut Jobs at Fastest Rate Since 2020 Amid Tax Hike Preparations

UK businesses are experiencing significant job cuts, with employment numbers dropping at the fastest rate since November 2020, as firms brace for rising payroll costs linked to tax hikes announced by Finance Minister Rachel Reeves. The S&P Global Flash Composite Purchasing Managers' Index (PMI) for February fell slightly to 50.5, indicating stagnation in economic growth amidst increasing inflationary pressures. Companies are facing cost burdens that have risen the most in nearly two years, with many attributing layoffs directly to the recent budget changes. While the services sector saw a modest increase in activity, manufacturing declined sharply, leading to concerns over a stagflationary environment that complicates the Bank of England's monetary policy. Business confidence remains fragile as new orders continue to fall, and the economic outlook appears uncertain. The situation highlights the challenges facing the UK economy as firms navigate rising costs and reduced demand.