Rolls-Royce, the renowned aircraft engine manufacturer, has unveiled plans to eliminate up to 2,500 jobs worldwide in an effort to create a more streamlined and efficient company. The decision marks the first major move by Tufan Erginbilgic, who assumed the role of chief executive in January amidst a challenging period for the company.
Describing Rolls-Royce as a “burning platform” upon taking the helm, Erginbilgic aims to address the impact of the pandemic on the aviation industry. With air travel grounded for extended periods, the company faced significant setbacks. While the exact breakdown of the job cuts remains unspecified, reports suggest that hundreds of back-office positions in the UK will be affected.
Rolls-Royce, which employs approximately 42,000 individuals globally, with half based in the UK, emphasised the necessity of engaging with unions before providing further details on the job cuts. The company’s submarines division in Derby, funded by the Ministry of Defence and employing 3,600 people, is expected to remain unaffected. Additionally, the Small Modular Reactor nuclear program, a joint venture with partners in Qatar and the US, will not be impacted.
In a separate development, recent figures indicate that average pay growth has surpassed inflation for the first time in nearly two years, signaling a potential easing of living costs. Wages rose by 7.8% between June and August, surpassing the average inflation rate over the same period. Revised data also revealed that pay exceeded inflation during the three months leading up to July, representing the first time since October 2021 that wages have outpaced prices.
However, it is important to note that this wage growth is an average, and not all individuals may experience relief from the pressures of the cost of living. Notably, there remains a substantial disparity between public and private sector pay, with public sector workers experiencing a wage growth of 6.8% between June and August, the highest increase since comparable records began in 2001, according to the Office for National Statistics.
Meanwhile, the Institute for Fiscal Studies (IFS), an influential think tank, has issued a warning that there is no room for tax cuts or spending increases ahead of an election. In its annual assessment of the UK’s tax, spending, and borrowing, the IFS asserts that the country faces a challenging fiscal situation. The think tank cautions that ill-timed tax reductions before an election could prove unsustainable, potentially leading to a protracted recession as interest rates are forced even higher.
As the tax burden continues to rise, with 4.5 million more individuals expected to enter higher income tax thresholds by 2028, the IFS estimates that the decision to freeze tax thresholds for six years will result in an effective tax rise of £52 billion per year by 2028. The institute’s warning underscores the need for prudent fiscal management as the UK faces the possibility of higher taxes in the long term.
