Employers still nervous as £20bn tax rise ‘hangs over like a fog’, survey says
Employers remain pessimistic about hiring new staff as businesses “hoped for more” from the Spring Statement, according to the Recruitment and Employment Confederation (REC).
Chancellor Rachel Reeves‘ Spring Statement saw multi-billion pound spending commitments on defence and construction as she vowed to “kickstart economic growth”.
But a new survey of more than 700 UK employers suggests that businesses remain downbeat about taking on new staff.
The survey was conducted before Reeves delivered her Spring Statement but a note from REC said: “Businesses hoped for more from this week’s Spring Statement to help them drive growth.”
The research showed a “very gentle trend of improvements” in business confidence but both measures taken – confidence in hiring and confidence in the UK economy – remained in the red.
Medium-sized and larger employers were more optimistic than small businesses as confidence among firms with up to 50 employees barely changed, the survey said.
REC’s last survey in January suggested that the rise in employers’ national insurance contributions had taken its toll on hiring intentions
Neil Carberry, REC’s chief executive, said that remained the case in their latest survey.
“We have seen business sentiment begin to improve this Spring, though the impact of the national insurance hike hangs over this like a fog,” he said.
The changes to employers’ national insurance contributions, which will come into effect from next week, will see firms pay an increase rate of 15 per cent of tax on earnings above a threshold of £5,000.
He urged Reeves to take action and introduce a raft of business-friendly policies to help the job market.
“Too often, the government talks a good game but day-to-day action paints business as the problem rather than the solution,” he said.
Carberry urged the Labour government to revise its flagship Employment flights Bill and make a “commitment to genuine partnership” that goes beyond setting up meetings.
“British business wants this government to succeed – but they need to support us to help them do it.”
Employers in London are negative about hiring in the short and medium term, representing low expectations among City firms for substantial economic growth this year.
“[Overall] optimism is tempered only a little by London, often a bellwether for the economy,” Carberry said.