The UK economy stagnated at the end of 2024 with the weakest private sector growth in 14 months, according to S&P Global's purchasing managers' index. Concerns over Labour's tax-raising budget led to widespread job cuts, with nearly a quarter of businesses reducing their workforce.
Almost one in four British businesses cut jobs in December amid widespread pessimism over the squeeze on their finances from Labour’s tax-raising budget. S&P Global’s purchasing managers’ index confirmed that the economy stagnated at the end of 2024 with the weakest private sector growth in 14 months. The final reading was at 50.4, slightly below the flash score of 50.5.
The closely-watched survey showed that firms shed jobs at the fastest pace in more than 15 years—when excluding the pandemic—after Chancellor of the Exchequer Rachel Reeves hiked a major payroll tax in her October 30 budget. Some 23 percent of employers said they’d reduced headcount. Businesses previously warned that the £26 billion national insurance raid would lower wage growth, limit hiring and push up prices, and December’s PMI is the latest survey to show the effect on jobs. Labour has said it needs to raise taxes to stabilize the public finances and pump more money into crumbling frontline services. “Concerns about the impact of rising payroll costs, alongside a general unease about the climate for business investment, were reported as the main factors weighing on prospects for growth in 2025,” said Tim Moore, economics director at S&P Global Market Intelligence. He said business optimism had failed to bounce back from the budget, with expectations for growth stuck at the two-year low. The UK economy has slowed sharply since Labour won a landslide victory in July’s election, after almost matching the strongest growth in the Group of Seven in the first half of the year. Last month revised figures showed that gross domestic product was flat in the third quarter, and the Bank of England expects the final quarter to be stagnant too. The slowdown laid bare the challenge Labour faces in reviving the economy after it promised to turbocharge growth to the fastest in the G
ECONOMY JOBS LABOUR PARTY TAXES BUSINESSES
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