More than 160,000 jobs are expected to disappear across the UK this year as employers cut back amid slowing economic growth and rising energy prices, new forecasts suggest.
Manufacturing, construction and retail are expected to be among the sectors hardest hit, with economists warning that weaker consumer spending and mounting business costs are likely to place further pressure on the labour market over the coming months.
The projections come as businesses continue to grapple with high energy bills, inflation concerns and economic uncertainty linked to the conflict in Iran, which has already fuelled concerns about supply chains and operating costs.
Predictions produced by forecaster the Item Club, which uses the same economic model as the Treasury, estimated that the UK would lose a net 163,000 jobs this year, representing a 0.4 percent fall in employment.
The group warned that losses would be concentrated in energy-intensive industries, particularly industrial manufacturing, where companies are facing sustained cost pressures. Economists also predicted knock-on effects across hospitality, accommodation and retail as households rein in spending.
Tim Lyne, an adviser to the Item Club, said the pressure would be felt particularly strongly in lower-income parts of the country where households had fewer financial buffers.
He said consumers in those areas “typically have less rainy-day savings, which will reduce spending in the retail and hospitality sectors”.
Unemployment expected to rise further
The forecasts add to concerns about a weakening jobs market after months of falling vacancies and slower hiring activity.
The unemployment rate stood at 4.9 percent in the latest official figures, but economists expect it to rise further in the coming months. The Bank of England has forecast that unemployment could climb to 5.1 percent this year.
Regional disparities are also expected to widen. Birmingham’s unemployment rate is forecast to rise from 6.7 percent to 7.8 percent, while Glasgow is expected to move above 5 percent after averaging 4.3 percent last year.
Cambridge was identified as the only major UK city likely to record modest employment growth during the year.
The Item Club said growth in publicly funded sectors such as health, education and social care would not be enough to compensate for losses elsewhere in the economy.
Temporary hiring rises as firms cut risk
Separate figures published last month by professional services firm KPMG and the Recruitment and Employment Confederation suggested permanent hiring activity had continued to weaken.
Their survey found permanent placements were falling at the fastest pace since the start of the year as employers became more cautious about recruitment. At the same time, businesses were increasingly relying on temporary workers while attempting to manage higher costs and uncertainty.
Neil Carberry, chief executive of the Recruitment and Employment Confederation, said some employers were opting for short-term staffing arrangements while trying to continue expansion plans.
He said: “The prevailing economic environment led to a preference for short-term staff at some firms who wanted to push ahead with business development and expansion plans.
“Businesses will be particularly concerned about the impact on inflation, their borrowing costs and any disruption to wider supply chains.”
The forecasts are likely to intensify concerns among employers already facing rising payroll costs and wider economic pressures following the introduction of new employment reforms earlier this year.
William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. He is a prolific author and contributor at Workplace Wellbeing Professional, with over 127 published posts covering HR, employee engagement, and workplace wellbeing topics. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers, and broader workplace trends.
- William Furney
- William Furney
- William Furney
- William Furney
