The UK's labour market is exhibiting troubling signs with a 0.5% drop in employment, reminiscent of recessionary periods, as reported by the Resolution Foundation. Businesses cite increased payroll taxes and rising minimum wage as deterrents to hiring. As a result, the Chancellor’s fiscal strategy could experience a £15 billion shortfall, affecting tax revenues due to reduced employment. Amid caution against hastily resorting to benefit cuts, the government is scrutinizing budget options, particularly regarding income tax thresholds, ahead of the forthcoming spring statement amid bleak economic projections.
The UK's slowing labour market, facing a 0.5% drop in employment, raises recession concerns as businesses freeze hiring due to rising costs.
With fewer employees, tax revenues will fall, risking a £15 billion gap in the Chancellor's fiscal strategy, challenging the government's spending limits.
James Smith warns against hasty cuts to benefits, emphasizing that measures harming the poorest households could generate 'real harm'.
Chancellor Reeves's pledge against rising taxes remains, yet extending income tax threshold freeze could raise £10 billion to meet fiscal rules.
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