Why European Companies Are Cutting Jobs

Source Credit : Portfolio Prints

Over the past year or so, job cuts across Europe have become more frequent. These layoffs are not isolated incidents but part of broader, interlinked pressures facing businesses. Some of the main reasons:

• Slowing Demand & Weak Economic Growth

  Many European economies are experiencing sluggish growth. Consumer spending is under pressure (due to inflation, uncertainty, etc.), and investment is weak. Companies that manufacture goods or depend on business investment are seeing less demand. When revenue projections worsen, cutting jobs becomes a tool to reduce cost.



• High Inflation & Rising Costs

  Inflation has raised input costs (energy, raw materials, logistics) significantly. It has also reduced households’ purchasing power, meaning people are buying less. At the same time, to counter inflation, central banks have raised interest rates, which increases the cost of borrowing for businesses. This squeezes margins and forces firms to reevaluate their cost structures — including labor.



• Tight Monetary Policy & Higher Financing Costs

  As inflation stayed high, central banks in Europe tightened monetary policy. Higher interest rates mean that companies pay more to borrow. Planned expansions, capital investments or even maintaining operations become more expensive. Especially for firms with debt or those that need to invest in new technologies (e.g. clean energy, digitalization), this is a headwind.



• Structural Changes in Key Sectors

  • Automotive & EV transitions: Automakers are under pressure to shift to electric vehicles (EVs), meet emissions/CO₂ targets, and adjust their production and product lines. This transition involves phasing out older, less efficient plants or models, which often means job losses in certain segments. Volkswagen, Stellantis, Renault are among those affected.
  
  
  • Technology & AI: Some tech firms are restructuring roles in response to AI. It’s not always a simple matter of “AI replaces worker,” but many companies are rethinking what roles are needed, which skills will matter going forward, and thus are conducting layoffs where roles or skillsets are deemed less central.
  
  
  • Overcapacity & outdated operations: Some manufacturing or heavy-industry operations are no longer competitive, especially those that are energy intensive, rely on older infrastructure, or are in regions with higher regulatory/compliance costs. Companies are shutting plants, moving operations, or reducing scale.



• Geopolitical & Trade Pressures

  Uncertainty from geopolitical conflicts (e.g. Russia-Ukraine), changes in trade policy (tariffs, trade barriers), supply chain disruptions and energy price volatility all feed into business risk. Companies facing uncertain inputs or markets tend to act conservatively, trimming staff rather than making risky hires.



• Regulatory & Environmental Pressures

  Europe has among the stricter environmental, labor, and regulatory regimes globally. Some of these regulations increase operating costs (for example, carbon pricing, emissions targets, environmental compliance). Companies that cannot offset these extra costs via efficiencies or pricing are under pressure, which can lead to downsizing or reallocation of operations.



• Profit Margin Pressures & Investor Expectations

  Investors in publicly-traded companies often demand consistent profits or at least credible paths to profitability. When costs rise and revenue growth slows, firms may cut jobs to protect margins, reduce operating expenses, and reassure investors. Layoffs are one of the levers available.

List of European Companies

Company	Industry / Sector	Reported Number of Job Cuts
Bosch	Auto parts / manufacturing	~13,000 jobs
Daimler Truck	Truck manufacturing / automotive	2,000 (USA & Mexico) + 5,000 in Germany
Stellantis	Automaker	~2,500 (voluntary redundancy scheme)
Volkswagen	Automaker	~7,000
Volvo Cars	Automaker	~3,000 (mostly white-collar)
Commerzbank	Banking / Financial services	~3,900 (by 2028)
HSBC	Banking / Financial services	348 jobs
Lloyds (Lloyds Banking Group)	Banking / Financial services	~1,500
UBS	Banking / Financial services	180 jobs
OMV	Oil & gas / energy	~2,000 positions
Uniper	Energy / Utilities	~400 jobs (~5 %)
STMicroelectronics	Semiconductors / Electronics	2,800 (in 2025) out of 5,000 over three years
Syensqo	Chemicals / Specialty chemicals	~200 jobs
ProSiebenSat.1	Media / Broadcasting	430 full-time positions
Reach (publisher)	Media / Publishing	321 jobs (while creating 135 new roles)
Auchan	Retail / Supermarket	710 jobs (and 25 store closures in Spain)
Burberry	Luxury / Fashion	~1,700 jobs (≈20 % of global workforce)
LVMH (Moët Hennessy Louis Vuitton)	Luxury goods / Conglomerate	~1,200 jobs (in wine & spirits unit)
Ericsson	Telecom / Networking equipment	100 technical employees
Just Eat Takeaway (Lieferando unit)	Food delivery / Online services	2,000 jobs (planned cuts)
Novo Nordisk	Pharmaceuticals / Healthcare	9,000 jobs (globally)

Sectors Most Affected & Examples

The impact of job cuts has not been uniform across Europe; instead, it is concentrated in a few key industries undergoing structural and financial pressures. The automotive sector has emerged as one of the most exposed, with companies such as Volkswagen, Stellantis, and Renault scaling back roles in production and research. Traditional combustion engine operations are shrinking faster than demand for electric vehicles can rise, leaving manufacturers in a transitional limbo.

Heavy industry and chemicals are facing a similar squeeze. Dow, for example, has announced the closure of several energy-intensive chemical plants in Europe, citing high regulatory costs and weak demand. The technology and consulting space is also undergoing painful restructuring. Accenture has reduced its workforce by targeting employees who cannot be retrained for roles aligned with artificial intelligence, even as it doubles down on hiring for new digital functions. Banking and financial institutions are trimming staff in retail branches and back-office operations as digital banking and automation reduce the need for human involvement. Logistics and transport firms, pressured by rising fuel costs and disrupted supply chains, are also consolidating, scaling back operations in less profitable regions.

Together, these sector-specific examples highlight a pattern: industries that are energy-intensive, heavily regulated, or caught in the middle of technological transitions are the most vulnerable to large-scale layoffs.

Implications & What to Watch

The wave of job cuts carries significant consequences for both workers and the wider economy. For employees, the immediate effect is displacement and the challenge of finding opportunities in a labor market that is increasingly demanding new skills. Many of the jobs being lost are not expected to return in their old form, which raises the stakes for reskilling and retraining initiatives. Governments and corporations that invest in equipping workers with expertise in digital tools, clean technologies, or advanced manufacturing are likely to be better positioned to manage the disruption.

At the same time, the emphasis on cost-cutting and automation could reshape productivity across Europe. Companies are accelerating their investments in artificial intelligence, robotics, and digital infrastructure to reduce reliance on human labor in repetitive or costly roles. This may enhance efficiency but risks deepening inequality between workers who can adapt and those left behind.

On a macroeconomic level, widespread layoffs risk feeding into slower consumer spending, creating a feedback loop of weaker demand and further job reductions. Policymakers face a delicate balance: cushioning the social costs of unemployment while also encouraging businesses to remain competitive in a changing global landscape. The trajectory of inflation, interest rates, and industrial policy will determine whether these layoffs mark a short-term adjustment or the start of a more protracted shift in Europe’s labor market.

Conclusion

In summary, European companies are cutting jobs due to a confluence of internal and external pressures: weak demand, high costs (from inflation, energy, finance), shifting technology demands (AI, EVs), regulatory burdens, and investor expectations. While some of these cuts are “painful”, many are viewed by companies as necessary to realign with a changing global economy.

That said, the severity and duration of the trend will depend on how quickly economic growth rebounds, how inflation and interest rates behave, how well workers adapt via retraining, and how governments support transitions.