Budget Tax Hikes and Economic Uncertainty Stifling Employment Growth

By Evans Momodu
2 minute digest

Companies are delaying investment and hiring due to economic uncertainty and tax increases, according to a new employment report by the Recruitment and Employment Confederation (REC) and KPMG.

The study found that permanent job vacancies fell at their fastest rate since August 2020, while temporary worker demand declined at a pace not seen since June 2020.

Recruitment consultants reported that rising employment costs, redundancies, and government tax policies are discouraging businesses from hiring.

Neil Carberry, CEO of REC, stated that firms are taking a "wait and see" approach, waiting for clearer signs of economic momentum before committing to new hires. He added that tax increases and economic uncertainty are acting as "brakes on progress."

Following last July’s election, the government introduced a £40bn tax hike, with businesses responsible for £25bn of the burden. Key measures included higher employer national insurance contributions, leading business groups to warn that this would hurt investment, reduce hiring, and drive up prices.

Official data released last month revealed that UK unemployment had risen to 4.4%, partly due to a decline in payrolled employees following the budget.

Recent private sector reports have also shown a surge in redundancies, with job cuts accelerating at the fastest rate in four years, according to the S&P Global purchasing managers' index.
Source: Sky news