Blow for Reeves as McDonald’s UK boss warns ‘it’s hard to do business’ | City & Business | Finance
The head of McDonald’s in the UK has vowed to continue investing in restaurants and workers despite making a worrying statement about severe “headwinds” that are forcing many businesses to cut costs and reduce workforces.
Lauren Schultz, managing director of McDonald’s UK and Ireland, said the group had maintained recruitment levels despite rising wage costs, employing between 70 and 130 staff per restaurant.
However, in this speech that will be interpreted as a warning for Chancellor Rachel Reeves, Schultz emphasized that difficult trading conditions put pressure on businesses.
He said: “It’s hard to do business at the moment.
“Whether it depends on the consumer or the number of competitors.”
He added: “In this headwind environment, people who don’t run their business the way we do may contract and step back to manage costs.”
Does MacDonald’s offer work experience placements?
But he insisted that “cost savings never lead to growth.”
“When you invest in your people… you get better business results.”
His remarks came after the group announced a paid placement scheme that would give 2,500 young people “a foot in the door” as their employment prospects are diminishing.
The fast food giant is launching what it describes as the UK’s biggest ever face-to-face work experience initiative to help tackle rising youth unemployment.
But the news that such a major British employer has taken on the challenge of doing business in Britain was a crushing blow for the Chancellor, who said he would make jobs and growth key priorities when he took office.
How many people work at MacDonald’s?
McDonald’s employs approximately 100,000 workers under the age of 25, and one in three managers is under the age of 25.
Ms Schultz said many young people did not have the work experience necessary to enter the workplace and she hoped the job placement program would give them an advantage.
“They want to be in the workforce but they can’t find a job because they don’t have that experience,” he told the Press Association.
A survey commissioned by McDonald’s for its inaugural Youth Confidence Index found that more than two-thirds (67%) of young people want to gain work experience, but 69% say there is a shortage of job placements in their area.
Additionally, more than 60% (61%) said they would not be able to get unpaid work experience.
Why is it so difficult to do business in the UK?
Rachel Reeves is facing the full brunt of the economic damage wrought by the Iran war, while also presiding over historically high levels of taxation and welfare spending that critics say has created a “doom loop” of lower consumer spending, business closures and rising unemployment.
Just over a week ago the IMF confirmed that the UK economy was suffering a singular downturn. The influential body cut Britain’s growth forecasts, warned inflation would rise and predicted unemployment would rise; It singled out the United Kingdom as one of the countries most affected by the fallout from the conflict, which threatens to plunge the global economy into recession.
How bad is the UK economy?
GDP is forecast to grow by just 0.8% this year, rising to 1.3% in 2027. As recently as January, the IMF had forecast growth of 1.3% this year and 1.5% next year; These figures now seem distant.
The UK economy grew at a weak 1.4 percent last year.
On inflation, the IMF expects prices to average 3.2% this year and 2.4% in 2027; This is well above their previous estimates of 2.5% and 2% respectively. Higher energy bills, more expensive fuel and rising food costs are expected to keep inflation high after the conflict. Gasoline prices have risen by 19 percent since the start of the war, while diesel prices have risen by more than a third.
Unemployment is expected to rise from 4.9 percent last year to 5.6 percent this year; This further increases the pressure on households already squeezed by rising living costs.
