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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
(32 minutes later)
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 workforce. 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.