UK suffers steepest hiring slump in Europe as Reeves's tax raid bites

"Britain has recorded the steepest decline in hiring intentions of any major European economy, as employers struggle with the fallout from last autumn's £26bn payroll tax raid and brace for another squeeze in the Chancellor's November Budget. Data from recruiter ManpowerGroup UK shows the UK labour market is slowing at a pace unmatched elsewhere in Europe. The margin has since collapsed to just 11 points, marking a 17-point fall over the past year."

"Petra Tagg, director at ManpowerGroup UK, described the situation as "a tough outlook for the UK." "Whereas last year the same pressure was being felt across Europe, this year the UK labour market is steering its own course and it's unlike one we've faced before," she said. The slowdown extends a three-year decline in hiring since the post-Covid boom, with the downturn now longer-lasting than the slump that followed the 2008 financial crisis."

"Ms Tagg warned that further hikes could drive companies to invest in artificial intelligence and automation rather than hiring staff. "The UK economy has stalled and with it so has hiring. The labour market has been moving at an almost glacial pace for months," she said. "What's needed now is a corrective course of action - relief on employment costs, clarity on policy timelines and bold investment in long-term infrastructure and pragmatic innovation.""

UK employers have sharply reduced hiring plans following last autumn's £26bn payroll tax increase and expectations of further measures in the Chancellor's November Budget. The proportion of firms planning to expand fell from a 28-point positive gap to just 11 points, a 17-point decline over the year, larger than declines in France and Germany. Hiring has been shrinking for three years, outlasting the post-2008 slump. Treasury insiders expect a further £20bn–£30bn of fiscal tightening, and past employer-focused tax rises have pushed up payroll costs amid flat productivity and persistent inflation. Firms may pivot to AI and automation rather than recruit, and calls were made for relief on employment costs, clearer policy timelines and investment in infrastructure and innovation.

Read at Business Matters