UK government ministers are planning to cut over 10000 jobs in the UK civil service to cut costs and free up funds for basic expenses.

The number of civil servants in the UK has surged to over 513000 this year, a 34% increase from 2016, and ministers are seeking to carry out a large number of voluntary layoffs.

In order to meet the budget set by UK Chancellor of the Exchequer Rachel Reeves, it may be necessary for government departments to cut their budgets. She has vowed to address the issue of "wasteful spending" and save up to 5% of expenses within each department. Each department has a responsibility to decide how to make cuts.

An informed official stated that there is a consensus within the government that the number of civil servants cannot continue to increase -2024 will be the eighth consecutive year that the total number of civil servants has increased. The previous Conservative government had vowed to lay off about 66000 people.

The government came to power in July after a historic failure against the current Conservative Party and has made a series of unpopular decisions to increase fiscal revenue. Prime Minister Keir Starmer has reduced winter fuel subsidies for the elderly, while Chancellor of the Exchequer Reeves announced a budget in October to increase taxes for businesses and farmers.

Reeves stated that all of these are necessary to help plug the £ 22 billion ($28 billion) "black hole" that the Labour Party claims the previous government left in public finances.

Although reducing the number of employees should free up funds for the government to achieve its priorities, including promoting economic growth, investing in clean energy, and reforming the national healthcare system, it may weaken the already tense relationship between the government and officials. Last week, Stamer said, "There are too many people in the government who feel comfortable in a controlled recession

After being harshly rebuked by Dave Penman, Secretary General of the FDA Senior Civil Servants Union, Stamer wrote a letter to Penman thanking the staff for their "unwavering and valuable public service spirit," but he stated that in some cases, the current system is ineffective.

A government spokesperson stated in a statement, "We are committed to improving the efficiency and effectiveness of the civil service through bold measures to enhance skills and utilize new technologies

The spokesperson said, 'According to our change plan, we will ensure that all departments of the government are fulfilling the priorities of the working people - achieving growth within a decade, putting more money in people's pockets, putting the National Health Service back on its feet, rebuilding the UK and ensuring our borders are secure, and revitalizing the country.'.

Cabinet Office Minister Pat McFadden stated in a speech on Monday that he hopes the operation of the civil service sector will be more like a startup company. He insists that he does not have a target for the number of employees, but states that his focus is on improving people's productivity with the help of technology.

The tax increase measures and the increase in the national minimum wage in Reeves' budget may further push up inflation. Official data shows that the overall inflation rate in the UK has risen to 2.3% in October, and the November data will be released on December 18th, which is expected to further reveal inflation trends.

Although Bank of England Governor Bailey welcomed the recent slowdown in price growth last week, he stated that inflation rates may hover slightly above the Bank of England's 2% target before 2027, and "there is still some way to go".

According to market research firm Kantar, the annual inflation rate of food and grocery prices reached 2.6% in the four weeks ending December 1st, an increase from 2.3% in the previous four weeks. This growth means that British consumers have increased spending pressure on groceries, especially the prices of toothbrushes, smoothies, juice and perfume.

At the same time, the prices of household paper products, dog food, and room temperature salty foods have dropped the fastest, indicating an imbalance in price changes among different commodities. TESCO Group, the largest supermarket in the UK, increased its sales by 5.2% in the 12 weeks ended December 1, and its market share reached 28.1%, the highest level since December 2017, which may reflect the increase of consumers' price sensitivity when facing inflation pressure. Supermarkets have warned that the tax increase measures and the nationwide minimum wage hike in the new government budget may further push up inflation.

The Bank of England is expected to maintain its benchmark interest rate unchanged next week, and its rate cuts will be slower than those of European and US central banks.

Investors believe that there is only a 10% chance that the Bank of England will lower the reserve rate from the current 4.75% on December 19th. The Bank of England has only lowered the reserve interest rate twice from its peak in 2016, making the pound the only G10 currency that has not fallen against the US dollar in 2024. Investors expect this' stop and go 'model to continue.

Investors are currently betting that the Bank of England will only cut interest rates three times between now and the end of 2025, with a total reduction of 75 basis points in the reserve rate.

In contrast, as Germany, France, and other eurozone countries are struggling, the European Central Bank is expected to lower its benchmark interest rate by 150 basis points, equivalent to six 25 basis point rate cuts, including one on Thursday.