British companies are laying off at the fastest pace in four years, putting increased pressure on the Bank of England to cut interest rates.

According to a survey by the Bank of England, UK businesses have seen the fastest rate of layoffs in four years this summer. The survey indicates that the impact of Chancellor Rishi Sunak's first budget is still visible in the labor market. A survey of chief financial officers on Thursday showed that in the three months to August, the proportion of businesses planning to lay off employees reached 0.5%, the largest decline since 2021. Businesses are expecting only a 0.2% increase in their workforce in the next year, which is lower than previous expectations. The survey shows that the measures taken by the Labour Party to improve public finances have put heavy pressure on employment. Businesses are struggling to cope with the 26 billion (approximately $35 billion) increase in payroll taxes that came into effect in April, while the minimum wage has also been significantly raised. Nearly half of businesses stated that they are laying off employees to cope with the rise in national insurance costs, second only to a decline in profits as a reason for layoffs. Bank of England Governor Bailey said on Wednesday that the state of the job market is crucial to the bank's future interest rate decisions. Despite policymakers being cautious about further easing in the face of high inflation levels, Bailey expressed concern about weak demand in the labor market. The Bank of England's decision makers also indicated growing concerns about intensified price pressures. Expectations for inflation in the next year have risen to 3.3%, the highest level in 17 months. Meanwhile, long-term expectations for the next three years have risen for the first time since January to 2.9%. Businesses also plan to raise their product prices by 3.7% in the next 12 monthsconsistent with the results from the July survey. Meanwhile, expectations for wage growth (an important factor in price setting) have remained at 3.6% for the third consecutive month.