LONDON (Reuters) – Britain’s jobs market showed further signs of cooling at the start of the year as demand for staff fell by the most since mid-2020, according to a survey that suggested the government’s payroll tax hike and economic uncertainty is weighing on hiring.
The monthly Recruitment and Employment Confederation and KPMG survey published on Monday showed the biggest drop in vacancies since August 2020.
Its measure of starting pay for people hired to permanent roles showed one of the slowest increases since early 2021 which is likely to reassure the Bank of England as it monitors inflation pressures in the economy.
Hiring for permanent roles contracted sharply again and was only marginally higher than December’s 16-month low while temporary billings fell by the most since mid-2020.
Neil Carberry, REC’s chief executive, said firms were taking a “wait and see” approach to hiring until momentum in the economy picked up.
“It takes time, and real action, to build business confidence,” he said. “An autumn of fiscal gloom, difficulty navigating significant upcoming tax rises … are all acting as brakes on progress.”
Finance minister Rachel Reeves announced in her October 30 budget that the rate of social security contributions paid by employers will increase from April and a threshold at which firms start paying it will fall, raising an extra 25 billion pounds a year for the government by 2029.
Carberry said last week’s BoE interest rate cut could help shore up business confidence.
The BoE reduced borrowing costs by a quarter-point to 4.5% on Thursday. It also halved its forecast for 2025 economic growth but said inflation was likely to spike this year.
The REC/KPMG survey showed the number of available candidates for roles continued to rise, possibly reflecting an increase in redundancies, although the pace of growth was its slowest in almost a year.
(Reporting by Suban Abdulla; Editing by William Schomberg)
