Britain braces for contemporary wave of job losses: Hospitality and High St shall be worst hit

Chancellor Rachel Reeves was last night warned that Britain faces a wave of job losses as struggling firms prepare to lay off workers.

The Office for National Statistics (ONS) said the number of people officially at risk of redundancy jumped by 29 per cent in January to 27,279.

The worst-hit sector was ‘distribution, hotels and restaurants’, which includes high street retailers as well as hospitality, where there was a 272 per cent increase to 8,165.

Businesses say they are being battered by higher taxes and wages and are battling to cut costs and stay afloat.

Shadow Business Secretary Andrew Griffith said: ‘Labour has played with matches and set the house on fire.

‘Higher taxes, rising minimum wages and more red tape are driving employers to make a wave of redundancies.’

Tax hikes: Businesses are struggling to cope with higher national insurance costs brought in by Chancellor Rachel Reeves (pictured)

The figures came just days after the ONS said unemployment is already at a five-year high of 5.2 per cent while the jobless rate among the young has soared to an 11-year high of 16.1 per cent.

The surge has fuelled fears of a ‘lost generation’ who face a lifetime on out-of-work benefits.

A pledge by the Chancellor to equalise minimum wage rates between younger and older workers is being questioned amid warnings it is pricing people seeking a first job out of the market.

The minimum wage for those aged 18 to 20 went up from £8.60 an hour to £10 in April last year, and is due to rise to £10.85 in April.

Employers are also grappling with higher national insurance costs, a rise in business rates and new rights for workers.

Helen Dickinson, chief executive of the British Retail Consortium, said: ‘The rise in potential redundancies in retail will be more bad news for jobseekers. 

‘With youth unemployment rising fast, the availability of flexible and entry-level roles is essential to giving people a first step on the ladder.

‘Yet rising wage costs and the risk of unintended side-effects from the Employment Rights Act mean retail employment is more fragile than ever. 

If the Government fails to consider business needs as they implement the Act, they will add complexity and reduce flexibility, ultimately stripping away entry-level and part-time opportunities.’

Analysis of ONS figures by the Mail shows that there have been 702,000 redundancies since Labour came to power, including 145,000 in the final three months of 2025.

It is feared there will be more to come. While there is often a rise in redundancies in the New Year, the 29 per cent jump last month compares to a 16 per cent increase between December 2024 and January 2025. 

And the ONS said last month’s figure was 22pc higher than January 2025, with potential redundancies in ‘distribution, hotels and restaurants’ up 67 per cent on a year ago.

Allen Simpson, chief executive of UKHospitality, said the ‘worrying spike’ should set alarm bells ringing. 

He added: ‘It is yet more evidence that rising business costs – from wages to energy to business rates – are placing unsustainable pressure on employers operating on razor-thin margins.

‘Hospitality is one of the UK’s biggest drivers of jobs and a critical entry point into work for young people. But escalating cost burdens risk choking off those opportunities just when they’re needed most.’

The British Beer and Pub Association said: ‘Our sector has struggled to absorb costs over the years and, inevitably, this means many face tough decisions no one wants to consider, let alone make.’