Chancellor Rachel Reeves will deliver a Budget on November 26 (Image: Getty)
Businesses are refusing to recruit new staff because they are desperately worried about potential tax rises in Rachel Reeves’sNovember Budget. Firms are putting off recruitment until they see what the Chancellor does, a new expert report shows. It follows last year’s Budget when the Chancellor put up National Insurance rates for businesses, increasing the cost of employing workers by ￡25billion, while increases to the minimum wage also pushed up costs. Firms also fear that the Government’s Employment Rights Bill will make it even more expensive to hire staff.
Ms Reeves is reported to be considering a range of new taxes in this year’s statement, but no details will be confirmed until she delivers her Budget on November 26. A new study by KPMG and the Recruitment and Employment Confederation (REC) warns: “Ongoing uncertainty around the economic outlook and concerns over costs contributed to a further reduction in staff hiring across the UK.”
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It said the number of vacancies “fell sharply” and there were reports of redundancies.
The report said: “Recruitment consultanc
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ies across the UK signalled a further reduction in the number of people placed into permanent job roles in August. Although the rate of contraction was the slowest seen in three months, it was steep overall and often linked to weak confidence around the economic outlook and concerns over costs.”
It also meant “softer rates of pay growth” because those firms that did want to recruit staff had more candidates to choose from.
Neil Carberry, REC Chief Executive, said: “All eyes are now on the Autumn Budget, in hope now that the Chancellor won’t do any further damage to the labour market with costs on hiring.
“For the economy to thrive, the Budget must recognise the need for investment in people. Long-term investment in skills, workforce stability, a more practical approach to the Employment Right Bill and meaningful partnerships with employers will yield far more enduring returns than short-term fixes.”
Jon Holt, Group Chief Executive and UK Senior Partner KPMG, said: “Given the speculation around upcoming Budget measures, it’s unlikely we’ll see a significant shift in recruitment patterns in the near term as businesses evaluate their investment strategies in response to policy commitments and the rapid pace of change brought by AI and new technologies.”
Recruiters have seen the steepest rise in candidates available for hire for nearly five years while growth in starting salaries also eased back to the slowest pace for four-and-a-half-years, the report found.
It showed a reading of 44.2 for permanent placements in the UK last month, up from 40 in July. Any figure below 50 represents decline in the job market, with levels over 50 showing growth. The data therefore indicated another month of contraction.
And the availability of staff increased at a “rapid and accelerated rate” in August, with upturns in permanent and temporary labour supply the most pronounced since November 2020.
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Rachel Reeves set to face 5 more blows as economy could worsen even further - here's how
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Brits could see major supermarket change as Labour floats new opening hours for one day
Bungling Keir Starmer just cost UK another ￡5bn - and YOU will pay in the Budget
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Rachel Reeves announces exact date of Autumn Budget as markets panic
Rachel Reeves told to rip up rules and unleash reckless spending spree - and YOU will pay
Supermarket and shop bills set to soar under new business rates shake-up
Rachel Reeves given urgent warning against 'chopping and changing' pension rules
Chancellor Rachel Reeves planning November budget to boost wages as UK falls behind
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Civil servants miss 'shocking' number of work days by calling in sick
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Rachel Reeves humiliated as Starmer's latest move shows he's lost all confidence in her
Rachel Reeves' brutal tax moves could spell the end of UK charity shops
Massive mortgage hikes loom as experts issue warning over Rachel Reeves's ‘doom budget'
New property tax rule could see some Brits pay extra ￡885 - check if you're affected
Rachel Reeves bombshell as new taxes would be ‘last nail in the coffin' for 1 sector
Rachel Reeves 'eyeing up new ￡2bn tax raid' and this time doctors are the target
Rachel Reeves set to face 5 more blows as economy could worsen even further - here's how
Rachel Reeves will torpedo trust if she breaks major tax promise
Brits could see major supermarket change as Labour floats new opening hours for one day
Bungling Keir Starmer just cost UK another ￡5bn - and YOU will pay in the Budget
The little UK market town with high street in crisis as independent shops on the brink
Rachel Reeves announces exact date of Autumn Budget as markets panic
Rachel Reeves told to rip up rules and unleash reckless spending spree - and YOU will pay
Supermarket and shop bills set to soar under new business rates shake-up
Rachel Reeves given urgent warning against 'chopping and changing' pension rules
Chancellor Rachel Reeves planning November budget to boost wages as UK falls behind
Rachel Reeves 8 potential Autumn budget tax hikes - from inheritance to pensions
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Civil servants miss 'shocking' number of work days by calling in sick
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Rachel Reeves bombshell as new taxes would be ‘last nail in the coffin' for 1 sector
Rachel Reeves 'eyeing up new ￡2bn tax raid' and this time doctors are the target
Rachel Reeves set to face 5 more blows as economy could worsen even further - here's how
Rachel Reeves will torpedo trust if she breaks major tax promise
Brits could see major supermarket change as Labour floats new opening hours for one day
Bungling Keir Starmer just cost UK another ￡5bn - and YOU will pay in the Budget
The little UK market town with high street in crisis as independent shops on the brink
Rachel Reeves announces exact date of Autumn Budget as markets panic
Rachel Reeves told to rip up rules and unleash reckless spending spree - and YOU will pay
The data comes after a survey by the Bank of England signalled last week that UK businesses cut jobs at the fastest pace for almost four years in August amid pressure from higher taxes and labour costs.
The Bank’s regulator survey of company finance chiefs shows UK firms cut employment by 0.5% over the three months to August.
It represents the biggest drop in employment levels since September 2021.
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