The Bank of England has said it is cutting jobs amid sweeping changes at Threadneedle Street after a highly critical review into its failure to forecast surging inflation.
Under budget pressures as it responded to the report from the former US Federal Reserve chair Ben Bernanke, the Bank has opened a voluntary scheme last week as part of an efficiency drive to find savings.
The process, which will run until mid-January, with staff expected to leave in March, was first reported by Bloomberg. The Bank said it was “a mutually agreed, time-limited scheme for staff to choose to apply to leave.
“We are now implementing a significant, multiyear transformation of our operations and this will condition our decisions. We are committed to ensuring the Bank is efficient, resilient and fit for the future.”
Threadneedle Street is undergoing an overhaul after Bernanke’s investigation called for the Bank to revamp its forecasting process to avoid a repeat of its flat-footed response to Britain’s deepest inflation shock in four decades.
The Bank, which is led by the governor, Andrew Bailey, said this year it was facing “difficult trade-offs” to meet its efficiency targets at the same time as pursuing its transformation programme, which includes updating its forecasting models and the communication of its interest rate decisions.
It is understood no target has been set for the number of staff who are expected to leave the Bank. The scheme will offer the same terms as current redundancy payouts – which is 10% of salary multiplied by years of service, capped at £150,000 or two years’ service, whichever is the lower amount.
The Bank’s most recent annual report showed headcount rose by more than 300 to 5,731 in the year to the end of February 2025. While most staff are based in London, it is in the process of increasing staff numbers in Leeds to 500 by 2027 as part of an expansion programme announced last year.
The Bank is widely expected to cut interest rates at its forthcoming monetary policy meeting on Thursday next week. Financial markets are anticipating a sixth reduction in borrowing costs to 3.75%, down from 4% and a recent peak of 5.25% in the middle of last year.
