London (Parliament Politics Magazine) – Job vacancies in the UK declined in November, marking the steepest fall since the pandemic, with business confidence dropping to its lowest in nearly two years.
The new monthly report from KPMG and the REC reveals a significant and accelerated decline in job vacancies, with the steepest fall since August 2020, dealing a setback to the government’s growth initiatives.
As reported by The Guardian, the previous month of November marked the 13th consecutive month of a fall in staff demand, with an “especially severe” drop in permanent vacancies, highlighting continued deterioration in the British labour market.
According to Neil Carberry, CEO of REC, “It should be a surprise to no one” about the warnings approach firms have taken post-budget, as they face the impact of a 1.2% point hike in payroll levies and a 6.7% increase in the minimum wage.
Jon Holt, group chief executive at KPMG, stated that companies are facing the financial implications of recent changes, resulting in a broad slow down across sectors.
Mr Holt 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.”
Binder Dijker Otte (BDO) reports that the firm’s confidence has fallen to its lowest level since January last year, as businesses struggle with rising costs and weakening consumer demand.
While Keir Starmer wants to grow the economy and improve living standards, the tax hikes from the October budget have made many business leaders disappointed, possibly slowing down investment and hiring.
The Bank of England (BoE) is closely observing the situation, as numerous businesses have indicated intentions to increase prices and consider job cuts.
BDO revealed that its business output index hit its lowest point since October 2023, even with the usually profitable “golden quarter” of Christmas sales.
They added, “December marks the end of a tough couple of years for businesses and the drop in business confidence this month is not a surprise given the significant challenges they continue to face.”
Last month, November saw the output index contract, the first such drop this year, indicating a reduction in the UK economy’s activity.
The KPMG/REC report warned that the jobs market slowdown, along with a rise in the number of candidates, could intensify the downward pressure on wage inflation.
According to the report, wage inflation in November held steady, staying at the 44-month low recorded in October.
Andrew Bailey, Governor of the Bank of England, agreed with retailer’s warnings over possible job cuts from the tax hikes in Rachel Reeves’s first budget.
The British Retail Consortium (BRC) predicts that retailers will be hit with a £2.3bn bill starting in April, as employer NICs increase and the earnings threshold for payments is reduced.
Retailers warn that the April implementation of the NICs hike and the national minimum wage is expected to add £2.7bn in expenses for retailers.
Neil Carberry, CEO of the REC stated, “The real question is whether businesses will return to the market as they go into next year with greater certainty about the path ahead.”
He added, “The resilience of temporary recruitment offers some hope. Firms are likely to rest more on temps while they manage the current uncertainty.”
Mr Bailey suggested last week that four interest rate cuts could occur next year, one more than predicted by the markets.
Jon Holt, CEO of KPMG said, “The prospect of further rate cuts through 2025, alongside the government’s investment plans, both point to improved growth in the near term. This should give businesses greater confidence which may help stabilise the labour market.”