Demand for new staff at businesses has fallen to levels seen in 2020 following last month’s budget, according to a survey of major recruitment consultants.
A monthly report from the Recruitment and Employment Confederation (REC) and accountants KPMG suggests the chancellor’s corporate tax raid Rachel Reeves on October 30, employers were forced to “reassess their recruitment needs.”
Its hiring intentions index is at its lowest level since August 2020.
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The findings are consistent with warnings from business groups and trade bodies following the budget that these measures would harm investment, wages and employment.
Increases in employer National Insurance contributions and the National Living Wage could also be passed on to consumers in the form of higher prices, they warned.
The government believes that these tax levies are necessary to help consolidate public finances.
Reeves hopes the survey results represent a one-off decline rather than the start of a longer slowdown in the labor market.
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She prioritized aid for workers as part of a growth-focused package covering Labor’s return to government, describing the measures as a one-off measure essential to rebuilding basic public services.
REC chief executive Neil Carberry said of the report: “No one should be surprised that businesses took the time to reassess their hiring needs in November after a tough budget for employers.
“The real question now is whether businesses will return to the market heading into next year with greater certainty about the path forward. »
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The economy slowed in the second half, although official figures covering October, released later this week, are expected to show a return to tepid growth.
Bank of England Governor Andrew Bailey said business reaction to the budget is:the biggest problem» faced by the Bank’s policy makers.
Uncertainty clouds growth forecasts in 2025.
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A Bank survey last week showed that 54% of businesses would respond to rising fiscal costs by cutting employment, while 38% expected wages to fall.
Reeves described the budget as a one-off project to repair public finances and fund improved public services and promised businesses a stable and predictable tax policy to help them plan and invest.
However, KPMG UK group managing director Jon Holt said expected interest rate cuts in 2025 and the government’s investment plans offered reasons for optimism.
“This should give more confidence to businesses, which could help stabilize the labor market,” he said.