Businesses slam brakes on hiring over Burnham uncertainty
The UK’s lofty tax bill and concerns surrounding the direction of an Andy Burnham premiership have led to a subdued jobs market, new research suggests, as employers pause hiring whilst they wait for further clarity on the likely incoming Prime Minister’s tax policies.
Available jobs in London slumped five per cent in the second quarter when compared with the first three months of the year, the latest employment monitor from recruiter Morgan McKinley showed. Professional job vacancies were down to 4,636, down three per cent year-on-year.
Separate research from the British Chambers of Commerce (BCC) found less than a quarter of firms were planning to increase the size of their workforce in the coming months, while just over one in ten were looking to cut staff.
“Business leaders are once again facing political uncertainty following Prime Minister Keir Starmer’s resignation,” Mark Astbury, director at Morgan McKinley said.
“Many organisations are delaying recruitment until there is greater clarity over the government’s direction and economic priorities.”
The spending commitments already trailed by Andy Burnham include reviving the HS2 leg to Manchester, nationalisation of utility firms and some form of compensation for Waspi women.
The Prime Minister-in-waiting’s commitment to Reeves’ fiscal rules – which aim to bring down the amount of borrowing by the government – have put the spotlight back on taxes and brought more uncertainty for businesses.
Businesses hit brakes on hiring
“If the next Prime Minister is serious about unlocking growth, then helping businesses invest in skills must be at the heart of their economic plan,” Patrick Milnes, head of people and work policy at the British Chambers of Commerce, said.
Recruitment challenges are also providing an issue for firms, with nearly three-quarters of companies reporting difficulties in finding new staff, the British Chambers of Commerce found.
Rising employment costs, including national insurance and upcoming employment law changes, are influencing hiring decisions and placing additional pressure on budgets, businesses told the BCC.
The UK economy was handed a modest upgrade by the International Monetary Fund (IMF) earlier this month, but growth is still expected to come in at just one per cent.
The IMF did strike an optimistic tone on the inflationary pressures on the UK, with price growth expected to return to the two per cent target by the middle of next year.
Soaring energy prices have rocked global economies following the outbreak of war in the Middle East, which pushed the price of oil to over $120 per barrel at the height of the conflict.
Morgan Mckinley’s Astubury said: “Stronger-than-expected GDP growth has not translated into hiring confidence”.
He added demand would remain the strongest for sectors which could drive growth, improve productivity and support digital transformation.