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Rachel Reeves’ tax raids drag UK to world’s worst hiring slump

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Senior City Reporter

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Private capital firms are eyeing up the UK market as the Chancellor promises funding support
Private capital firms are eyeing up the UK market as the Chancellor promises funding support

Chancellor Rachel Reeves’ tax raids on employers have continued to harm the economy with fresh figures showing the UK had the worst hiring slump across the globe.

The UK suffered the biggest global drop in year-on-year planned hiring, contracting 17 percentage points. Singapore, Hungary and Finland, which followed, all contracted nine per cent, according to new data from recruiter Manpower Group.

On a quarter-on-quarter basis, the UK was still hit the worse with a fall of eight percentage points.

Petra Tagg, director at ManpowerGroup UK, said: “The UK economy has stalled and with it so has hiring.

“The labour market has been moving at an almost glacial pace for months and while there remains some movement in roles for the highly skilled, we’re very far off the 30 per cent hiring outlooks we saw in early 2022”.

Employers stung by Reeves’ tax hikes

The glum figures follow the 2024 Autumn Budget, where Reeves targeted businesses for the brunt of her £40bn tax grab.

But as attention turns to the Labour government’s second Budget, Reeves has been warned to avoid further hammering British firms.

Manpower’s report said the Autumn Budget would be “make or break for employers navigating cost pressures, AI disruption and policy uncertainty”.

Over 40 per cent of bosses were planning to hire ahead of last year’s budget with only 13 per cent considering cuts.

However following the increase in employer costs, namely Reeves hike to employer’s national insurance contributions and the minimum wage, firms were forced to pivot.

The gap between those looking to hire and cut has shrunk to a fresh low of 11 points, compared to 28 previously.

The 17-point decline drastically outpaces the likes of France and Germany, which experienced falls of eight and five.

Tagg said: “It’s a tough outlook for the UK at the moment.

“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.”