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Klarna to cut 10% of staff as it warns of recession | Klarna to cut 10% of staff as it warns of recession |
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Buy now pay later firm Klarna has announced plans to cut around 700 staff as it warned of a "likely recession". | Buy now pay later firm Klarna has announced plans to cut around 700 staff as it warned of a "likely recession". |
The Swedish firm blamed a combination of rising prices, a change in consumer sentiment and the war in Ukraine for the move. | The Swedish firm blamed a combination of rising prices, a change in consumer sentiment and the war in Ukraine for the move. |
"What we are seeing now in the world is not temporary or short-lived, and hence we need to act," said chief executive Sebastian Siemiatkowski. | "What we are seeing now in the world is not temporary or short-lived, and hence we need to act," said chief executive Sebastian Siemiatkowski. |
The cuts equate to around 10% of Klarna's 7,000-strong workforce. | |
"When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today," said Mr Siemiatkowski. | "When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today," said Mr Siemiatkowski. |
"Since then, we have seen a tragic and unnecessary war in Ukraine unfold, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession." | "Since then, we have seen a tragic and unnecessary war in Ukraine unfold, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession." |
There are fears the UK could fall into recession - defined as the economy getting smaller for two consecutive quarters - after official figures revealed the economy shrank in March. | |
Higher prices are beginning to bite into household budgets and people have started spending less and cutting down on car journeys due to high fuel costs. | |
Soaring energy bills and food prices are also having an impact and inflation - the rate at which prices rise - jumped to 9% in April and is expected to reach more than 10% by the end of the year. | |
Commenting on the cuts, Klarna said its affected employees in Europe will be offered "to leave Klarna with an associated compensation", but added outside of the continent, " the process for impacted employees will look different depending on where you work". | |
Buy now, pay later services were used by five million people in the UK for total sales of £2.7bn in 2020, but one in 10 people using them already had debt arrears elsewhere, a review by the Financial Conduct Authority last year found. | |
Such schemes have been widely criticised for encouraging shoppers to buy more than they can afford. |