London suffers most job losses after Labour's tax hikes
LONDON – London is bearing the brunt of the UK's jobs slowdown as a combination of tax rises, elevated wage costs and weak consumer spending force the city's business to cut payrolls faster than in the rest of the country.
The capital has shed almost 45,000 jobs since October when the Labour government announced a £26 billion (S$45 billion) hike in employers' national insurance – a payroll tax – and a new higher minimum wage, according to tax data.
It means one in four of all job losses across the country have come in the UK's most productive region. Combined with the surrounding South East region, the rate rises to nearly four in 10 lost jobs.
Retail and hospitality are among the worst-affected sectors, according to figures published by the Office for National Statistics earlier in the week, and a large share of these roles are based in London – business group UKHospitality says about a third of jobs in its sector are in the capital.
Keeping pubs and restaurants going is increasingly difficult, according to Kate Nicholls, UKHospitality's chief executive. She said London was the least competitive city in Europe in terms of taxes and other costs and has lost around 30,000 hospitality jobs over the last year.
'The rent is higher, the business rates are higher, the wage costs are higher, and we are not seeing enough money coming through the front door to be able to cover those costs and for businesses to remain viable,' Ms Nicholls said during a phone interview.
Separate data from Indeed – a jobs website – confirmed that vacancies in London have dropped faster than the national average since October. Retail and hospitality job ads in the capital fell almost 40 per cent over that period, compared with declines of 26 per cent and 9 per cent, respectively, recorded across the country.
Data on Aug 14 showed the UK growing at a faster rate than other Group-of-Seven countries, but most of the boost came from government spending, while consumers are still reluctant to splash out. This could be benefiting areas of the country that rely more on the public sector than London does, according to Anna Leach, chief economist at the Institute of Directors.
The tech sector has been paring back recruitment after quickly expanding during the pandemic and Jonathan Steenberg, UK economist at credit insurer Coface, said insolvencies in the IT and communications industries are up by almost one-third from a year ago.
Artificial intelligence (AI) may also be playing a role, as it replaces some roles in finance, marketing and management consulting, while some international employers with London headquarters are freezing recruitment in the face of heightened geopolitical tensions.
In the retail sector, meanwhile, further job losses are expected as the fear of tax hikes weighs on consumer spending.
'Employers are concerned about relatively low demand, they're concerned about low consumer confidence, and they're really concerned about what lies ahead in the next budget,' said Andrew Goodacre, chief executive officer at British Independent Retailers Association. BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNA
15 hours ago
- CNA
Part of Maryland digital ad tax law declared unconstitutional
A federal appeals court on Friday declared unconstitutional a Maryland law prohibiting companies that pass on the costs of the state's first-of-its-kind digital advertising tax from telling customers why prices went up. Reversing a lower court ruling, the 4th U.S. Circuit Court of Appeals unanimously agreed with the Chamber of Commerce and two other trade groups that the restriction violated members' First Amendment free speech rights, while insulating Maryland lawmakers from criticism and political accountability. The offices of Maryland's Attorney General Anthony Brown and the only defendant, state Comptroller Brooke Lierman, did not immediately respond to requests for comment. Aimed at larger businesses such as Meta Platforms' Facebook and Alphabet's Google, Maryland's 2021 law taxed companies that generated at least $1 million of gross revenue from digital ad services in the state. Maryland imposed levies on a sliding scale based on companies' global revenue, and lawmakers said the tax could raise $250 million annually. The Chamber of Commerce, NetChoice and the Computer & Communications Industry Association sued, calling the law a punitive assault on digital rather than print advertising. Friday's decision concerned their objection to a provision against passing on the cost of the tax "by means of a separate fee, surcharge, or line-item," saying it effectively forbade businesses from shifting blame to lawmakers. Circuit Judge Julius Richardson wrote for a three-judge panel, however, that the provision ensured that companies would bear economic and legal responsibility for the tax. He said Maryland didn't justify this, and the provision was facially unconstitutional. "The pass-through prevents companies from describing the tax in the one setting where the consumer is guaranteed to look: the invoice," the judge wrote. "Keeping out of hot water with voters is not among the interests that can justify a speech ban." Richardson added: "As much today as 250 years ago, criticizing the government - for taxes or anything else - is important discourse in a democratic society. The First Amendment forbids Maryland to suppress it." The Richmond, Virginia appeals court returned the case to U.S. District Judge Lydia Kay Griggsby in Greenbelt, Maryland, to determine appropriate remedies. In separate statements, the trade groups welcomed the decision. "The Fourth Circuit was absolutely correct," said Paul Taske, co-director of the NetChoice Litigation Center. "Maryland tried to prevent criticism of its tax scheme, and the Fourth Circuit recognized that tactic for what it was: censorship." The case is Chamber of Commerce et al v. Lierman, 4th U.S. Circuit Court of Appeals, No. 24-1727.
CNA
19 hours ago
- CNA
Free meals clause in Bukit Canberra hawker contracts will be removed from renewed tenancy agreements
SINGAPORE: The clauses requiring Bukit Canberra hawkers to provide free meals will be removed when their tenancy agreements are renewed in September, the operator said on Friday (Aug 15). In a post on Facebook, Canopy Hawkers Group said it has 'heard the feedback and concerns" that have been raised. A 2024 version of the contract seen by CNA states that a stall tenant 'shall participate' in the pay-it-forward programme 'as implemented and/or directed by the company', requiring them to set aside 100 meals at their own cost for the scheme. Lawyers told CNA on Thursday that the wording of the clause in the existing contracts, particularly the use of the word 'shall', suggested that tenants are legally obligated to participate in the scheme. Canopy Hawkers Group previously said that it initially included the clause because the tenants were selected based on their willingness to participate in the pay-it-forward programme. 'At that time, we felt it was important to include the commitment as a clause in the tenancy agreement because other hawkers had lost out on securing a stall based on, among other things, this commitment,' the operator said in its Facebook post on Friday. Acknowledging again that participation in charitable causes should be voluntary, the operator said: 'But given the circumstances, we saw the arrangement as one that balanced both the voluntary involvement with the fulfillment of their promises.' Some hawkers had shared that they may not be able to fulfill their commitments 'even though they would have liked to, if their circumstances had been better', said Canopy Hawkers Group in the Facebook post. The operator also said it learned that the meal assistance programme running in the constituency where Bukit Canberra Hawker Centre is located relies on voluntary contributions from patrons, not hawkers. 'We therefore decided to hold back on implementing the 'Pay-It-Forward' initiative, and may decide not to proceed based on the current concept,' the operator said. This is why no hawkers have been penalised for not providing free meals under the tenancy agreements and the management does not intend to enforce the obligation in the future, it said in its post. 'This is a commitment we are making publicly.' The operator also addressed the interest in budget meals provided at Bukit Canberra Hawker Centre, which it noted was different from the programme meant to provide free meals to customers in need. 'To provide residents with a range of offerings at Bukit Canberra Hawker Centre, we work with our hawkers to offer food options at different price points. This includes more affordable value meals,' it said in its post on Friday. 'These value meals do not form a large part of the meals sold, and our hawkers are not expected to make a loss selling value meals.' Bukit Canberra Hawker Centre is one of several social enterprise hawker centres in Singapore. In 2024, then-Senior Minister of State for Sustainability and the Environment Koh Poh Koon said that all social enterprise hawker centre operators must propose ways to ensure affordable food options are available as part of their tender proposals. "So far operators have committed that all stalls in their centres will provide at least one value meal option. This is not an attempt to force hawkers to sell all of their dishes at low prices,' he had said at the time.
Business Times
a day ago
- Business Times
London suffers most job losses after Labour's tax hikes
[LONDON] London is bearing the brunt of the UK's jobs slowdown as a combination of tax rises, elevated wage costs and weak consumer spending force the city's business to cut payrolls faster than in the rest of the country. The capital has shed almost 45,000 payrolls since October 2024, when the Labour government announced a £26 billion (S$45.2 billion) hike in employers' national insurance – a payroll tax – and a new higher minimum wage, according to tax data. It means one in four of all job losses across the country have been in the UK's most productive region. Combined with the surrounding South East region, the rate rises to nearly four in 10 lost jobs. Retail and hospitality are among the worst-affected sectors, according to figures published by the Office for National Statistics earlier in the week; a large share of these roles are based in London – business group UKHospitality says about a third of jobs in its sector are in the capital. Keeping pubs and restaurants going is increasingly difficult, said Kate Nicholls, UKHospitality's CEO. She said London was the least competitive city in Europe in terms of taxes and other costs, and has lost around 30,000 hospitality jobs over the last year. 'The rent is higher, the business rates are higher, the wage costs are higher, and we are not seeing enough money coming through the front door to be able to cover those costs and for businesses to remain viable,' Nicholls said during a phone interview. A NEWSLETTER FOR YOU Friday, 3 pm Thrive Money, career and life hacks to help young adults stay ahead of the curve. Sign Up Sign Up Separate data from Indeed, a jobs website, confirmed that vacancies in London have dropped faster than the national average since October. Retail and hospitality job ads in the capital fell almost 40 per cent over that period, compared with declines of 26 per cent and 9 per cent, respectively, recorded across the country. Public versus private GDP data on Thursday (Aug 14) showed the UK growing at a faster rate than other Group of Seven countries, but most of the boost came from government spending, while consumers are still reluctant to splash out. This could be benefiting areas of the country that rely more on the public sector than London does, said Anna Leach, chief economist at the Institute of Directors. 'It's a logical extrapolation that in an environment where you've got stronger government spending and weaker private sector spending and growth, similar trends in headcount follow,' Leach said. 'You would see stronger growth in those areas of the country which have got bigger public sectors, and consequently slower growth in parts which are more dominated by the private sector.' While a higher minimum wage can put pressure on roles at the lower end of pay scales, such as those in shops and bars, London's relatively high salaries also mean that some companies will look toward their employees in the city when trying to cut costs. White-collar roles in sectors such as IT, communications and science were hit by cuts, the ONS data showed. The tech sector has been paring back recruitment after quickly expanding during the pandemic. Jonathan Steenberg, UK economist at credit insurer Coface, said insolvencies in the IT and communications industries are up by almost one-third from a year ago. Artificial intelligence may also be playing a role, as it replaces some roles in finance, marketing and management consulting, while some international employers with London headquarters are freezing recruitment in the face of heightened geopolitical tensions. In the retail sector, meanwhile, further job losses are expected as the fear of tax hikes weighs on consumer spending. 'Employers are concerned about relatively low demand, they're concerned about low consumer confidence, and they're really concerned about what lies ahead in the next budget,' said Andrew Goodacre, chief executive officer at the British Independent Retailers Association. BLOOMBERG
