Hiring slumps to ‘pandemic-era level’ in wake of budget
Demand for new staff among businesses slumped to levels seen in 2020 in the wake of last month’s budget, according to a survey of major recruitment consultants.
A monthly report by the Recruitment and Employment Confederation (REC) trade body and accountants KPMG suggested that the tax raid on firms announced by chancellor Rachel Reeves on 30 October forced employers to “re-assess their hiring needs”.
Its index covering hiring intentions came in at its lowest level since August 2020.
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The findings chime with warnings from business groups and trade bodies in the wake of the budget that the measures would hurt investment, pay and employment.
The hike to higher 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 argues the tax take is necessary to help put the public finances on a more stable footing.
Ms Reeves will hope that the survey’s findings represent a one-off dip rather than the start of a longer downturn in the labour market.
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CBI chief’s approach to budget tax shock
She has prioritised help for working people as part of a growth-focused agenda covering Labour’s return to government, describing the measures as an essential one-off to rebuilding core public services.
REC chief executive Neil Carberry said of the report: “It should be a surprise to no one that firms took the time to re-assess their hiring needs in November after a tough budget for employers.
“The real question now is whether businesses will return to the market as they go into next year with greater certainty about the path ahead.”
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Chancellor confident despite low growth
The economy has slowed during the second half of the year though official figures covering October, released later this week, are tipped to show a return to tepid growth.
Bank of England governor Andrew Bailey has said that the reaction of business to the budget is the “biggest issue” facing Bank policymakers.
The uncertainty is clouding forecasts for growth in 2025.
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A survey by the Bank last week showed 54% of businesses would respond to the higher budget costs by reducing employment, while 38% expected lower wages.
Reeves has described the budget as a one-off to fix the public finances and pay for improved public services and has promised businesses stable and predictable tax policy to help them plan and invest.
However Jon Holt, group chief executive of KPMG UK, said expected interest rate cuts in 2025 and the government’s investment plans offered reasons for optimism.
“This should give businesses greater confidence which may help stabilise the labour market,” he said.
An amber warning has been issued for snow in a part of the UK, likely to cause travel delays and “stranding some vehicles and passengers”.
The warning, which covers south west England, also warns some rural communities could become cut off and is in place until 2pm this evening.
Pic: Met Office
There is also a yellow weather warning for snow covering the southern counties of England until midnight on Wednesday.
The warning stretches from Kent to Cornwall and up to south London and the Met Office said between 2cm and 5cm of snow could accumulate fairly widely, with as much as 10cm over higher ground.
This week is expected to see the coldest nights of the year, with temperatures potentially reaching -14C on Wednesday night and -16C on Thursday night, both in the North East of England and Scotland, the Met Office said.
Weather warnings issued on Tuesday for snow and ice covering the parts of Wales, the North West of England, west and northern parts of Scotland as well as Northern Ireland will remain in place until midnight tomorrow.
The forecaster said some roads and railways are likely to be affected and there could be icy patches on untreated roads.
Pics: AP
Meanwhile the Environment Agency has said at least 300 properties have flooded across England since New Year’s Eve. It estimates more than 41,000 properties have been protected.
Heavy rainfall over the New Year caused significant river and surface water flooding across the North West of England and Yorkshire and snowmelt has brought further disruption to parts of England, particularly the Midlands, the agency said.
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Floods minister Emma Hardy said: “My sympathies go out to the people, businesses and communities impacted by the recent flooding across the country.
“I want to express my heartfelt thanks for the vital work that the Environment Agency and emergency services are doing to keep people safe. People must continue to follow their advice and sign up for flood warnings.”
Flood warnings
Some 100 flood warnings were in force across England on Wednesday, with people urged to remain vigilant over the coming days.
A danger-to-life warning was issued on Tuesday morning for the River Soar near Barrow upon Soar, Leicestershire, but was later removed.
People living in caravan parks in the area were urged by the Environment Agency to act, with a large-scale evacuation needed to save lives.
Firefighters have rescued dozens of people across Leicestershire since Monday, Leicestershire Fire and Rescue Service said.
Hundreds of schools were closed across the UK, with road and rail links blocked, as Manchester, Bristol and Liverpool John Lennon airports suspended flights because of the conditions.
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