Firms are cutting jobs and recruitment ahead of anticipated new tax increases. (Image: Getty)
Businesses have been cutting jobs and slowing recruitment at concerning rates before Rachel Reeves' Budget tax rises kick in, according to two surveys.
The polls revealed that, in January, firms let people go and stopped hiring new employees at the highest levels in over a decade.
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This comes before the April ￡25 billion increase in employers' National Insurance contributions (NICs), which the Tories have said will "kill growth stone dead" and put "countless jobs at risk".
The primary rate of employer NICs will increase from 13.8% to 15%, and the minimum earnings to warrant these payments will fall from ￡9,100 to ￡5,000 a year.
Andrew Griffith, shadow business and trade secretary, told The Times: "The Conservatives warned that Labour’s National Insurance jobs tax and -economic mismanagement would kill growth stone dead, putting countless jobs at risk.
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Businesses are anticipating Rachel Reeves' NICs increase. (Image: Getty)
"These reports are deeply concerning, but the bad news doesn’t end there. Just last week, the Bank of England halved their growth forecasts and warned that inflation and unemployment will rise. Labour is taking us back to the dark days of the 1970s."
According to data from accountancy and advisory firm BDO, private sector employment dropped to its lowest since 2012, and business confidence plummeted to a two-year low.
During the pandemic, there were also the fewest job vacancies since August 2020, according to research by the -Recruitment and Employment -Confederation (REC) and KPMG.
The CEO of the REC, Neil Carberry, said: "An autumn of fiscal gloom, difficulty navigating significant -upcoming tax rises, and little progress on the practicalities of a costly new -approach to employment rights are all acting as brakes on progress."
Jon Holt, group chief executive and UK senior partner at KPMG added: "It is unlikely that we will see any significant improvements in the survey data over the near term, as hiring stays muted and staff availability continues to rise."
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The Bank of England has also raised the alarm over the NICs increase, which it said would increase the cost of hiring low-paid staff by 5%.
The central bank also slashed its 2025 growth forecast from 1.5% to 0.75%. Inflation is expected to increase from 2.5% to 3.7%, and unemployment from 4.4% to 4.8%.
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A government spokesman told the outlet: "This government is determined to go for growth and to work in partnership with businesses to invest in Britain’s future so we can make every part of the country better off.
"As part of this, we are providing the certainty businesses need by capping corporation tax for the duration of Parliament and locking in permanent full expensing to boost investment.
"We have also consulted with businesses and unions to ensure the Employment Rights Bill works for -employers and workers alike."