(Bloomberg) -- UK firms scaled back job postings by the most in over four years in November, delivering an immediate verdict on the tax hikes in Labour’s first budget.
Vacancies recorded the steepest decline since August 2020, driven by a fall in permanent positions, according to the Recruitment & Employment Confederation and KPMG. The combination of fewer openings and more people available for work kept wage growth at its weakest since 2021.
The report is one of the clearest signals yet that the £40 billion ($50.9 billion) of tax increases announced by Chancellor Rachel Reeves on Oct. 30 are putting a brake on hiring. Employers are bearing the brunt in the form of a 1.2 percentage-point rise in payroll levies from April, in addition to a 6.7% increase in the minimum wage.
“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,” said Neil Carberry, REC Chief Executive.
Jon Holt, group chief executive and UK senior partner at KPMG, said: “Businesses are having to weigh up the prospect of increasing employee costs following the budget, which has led to an accelerated slowdown in hiring activity across the board.”
The Bank of England, which follows the REC survey, is closely watching the impact of the budget on hiring, pay and consumer prices to gauge whether it warrants a change to its “gradual” approach to cutting interest rates. Its own survey of chief financial officers found that half of firms plan to increase prices and cut jobs.
Some employers are reducing starting pay offers and are likely to make more use of temporary staff to see them through a period of “uncertainty,” according to the REC. The number of people placed in permanent jobs fell at an accelerated pace last month.
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