This summer, UK businesses reported the fastest rate of job cuts in over four years, according to the latest Bank of England survey. The findings reflect growing pressure on employers in the face of rising costs, tighter margins and uncertain economic conditions.
From an HR and people perspective, this isn't just a financial headline. It's a snapshot of what many business owners are feeling right now.
What the data shows
The Bank's Decision Maker Panel, which surveyed over 2,000 companies, found a 0.5% decline in employment in the three months to August. That might sound small, but it represents a significant shift in workforce strategy across thousands of businesses.
Over 46% of firms said they had cut staff in direct response to the rise in employer National Insurance contributions. The increase from 13.8% to 15%, introduced in the last autumn budget, is one of several cost pressures currently reshaping business decisions.
In parallel, two-thirds of firms reported shrinking profit margins. Others have increased prices or frozen wage growth. Confidence in job growth is slipping, with hiring expectations down and redundancies on the rise.
Why it matters
These statistics aren't just about numbers. They reflect the real challenges that SMEs are navigating daily. Tighter margins, rising payroll costs, and uncertainty about future tax policy all make workforce planning harder. For many, it's no longer about growth. It's about stability.
And when things get tight, it’s your people decisions that often carry the weight. Redundancies, restructures and pay freezes can help reduce costs. But they also come with legal risk, reputational damage, and a long-term impact on engagement and morale.
What business owners should be thinking about
Now is the time for employers to pause and plan:
- Review your cost base. If payroll costs are rising, where else can efficiencies be found without losing key talent?
- Think longer-term. Redundancies may ease short-term pain but could cost more later if skills are lost or rehiring is needed.
- Communicate clearly. When confidence drops, clear leadership and honest conversations matter more than ever.
- Understand your obligations. Changes in legislation, such as the upcoming Employment Rights Bill, could affect how and when you restructure.
Stay proactive, not reactive
At enlightenHR, we believe HR should give business owners confidence, not confusion. The headlines may feel overwhelming, but you're not alone.
Whether you're navigating budget decisions, reviewing your structure, or planning for 2026, we can help. Our team supports SMEs across the South West and beyond to manage change well, avoid risk and build people strategies that actually work.
If you'd like to talk through your options or understand how the changes affect your business, get in touch.
Free HR Consultation available
Click here or call us on 07432 203979 to arrange a free appointment and start the conversation.
We’re here to help you lead your business through change, with confidence.
Holly Mapstone is an HR expert and specialises in helping those of you in the SME sector with all of your HR needs.
Consultancy allows Holly to be agile and to adapt her style and support to suit the needs of her clients. Building strong working relationships allows Holly to deliver improvements, while also aligning people strategy to business outcomes and promoting resilient and positive cultures.
Need Advice?
If you need a hand with any of this, or anything else when it comes to the people and practices in your business, we’d love to help. We are always happy to debate the pros/cons, dos/don’ts with you so please do talk to us if we can help in any way, we are here to support you. Just give us a call and arrange a free consultation. You can talk to Holly directly on 07432 203979 or email info@enlightenhr.com
