Bank of England plans staffing cuts because of budget pressures

[LONDON] The Bank of England is planning to reduce head count as its finances become strained by the cost of the modernisations recommended by Ben Bernanke.

The UK central bank has invited staff members to volunteer for potential layoffs, according to two people familiar with the matter. If it fails to meet efficiency targets it may levy higher charges on the UK’s banking and financial services sector, according to the minutes of the July meeting of its directors. 

The decision comes amid budget pressures incurred by the overhaul of the BOE’s forecasting and communications that it implemented on the back of former Federal Reserve chair Bernanke’s 2024 report. Officials have grown increasingly concerned about a funding squeeze that has worsened after a number of big projects, including repairs to its tech infrastructure and extra hiring in response to the review. 

The layoffs process began last week and runs until mid-January with staff expected to leave in March. The BOE had already decided to shelve non-essential investments and has previously conceded that it would need to make ambitious efficiencies.

While Bernanke’s report found that the BOE’s forecasting errors during a period of post-Covid inflation were consistent with those at other central banks, he said the infrastructure underpinning its projections were in urgent need of reform. 

The BOE did not immediately return a request for comment.

Unite, the union which represents employees at the bank, “will always oppose any compulsory job losses across the financial services sector,” it said in a statement, adding that job-cutting process must be transparent and fair.

The BOE’s Court of Directors signed off on a three-year budget plan in July. Minutes from that meeting warned the BOE needs to “meet an ambitious efficiency target in the next financial year, in order to limit growth of industry levies.” BLOOMBERG