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2mo ago

UK Firms Cut Staff at Fastest Pace Since 2021, Boosting Odds of December Rate Cut

Weak hiring has lifted market expectations for a December cut despite stubborn price pressures.

The Bank of England in Threadneedle Street, London, ahead of the publication of the Bank of England financial stability report. Picture date: Tuesday December 2, 2025. Yui Mok/Pool via REUTERS
Rachel Reeves’s budget raised taxes by £26 billion

Overview

  • Bank of England survey data show private‑sector employment fell 1.8% in November, the steepest monthly decline since July 2021.
  • Finance directors in the survey expect to reduce headcount by about 0.7% over the next 12 months, the weakest outlook since October 2020.
  • HMRC records a year‑on‑year drop of 180,000 in payrolled employment to October, a rare decline outside the pandemic period.
  • Longer‑run inflation expectations in the Bank’s panel rose to 3.0% with one‑year expectations at 3.4%, while reported wage growth ran at 4.6% over the past year and firms plan 3.6% in the year ahead.
  • Economists link the hiring pullback to pre‑Budget tax uncertainty as the Autumn Budget raised roughly £26bn, and investors now expect a 25bp cut at the December 18 MPC meeting.