Firms halt hiring amid fears over Budget as Reeves is urged not to do ‘any further damage’ to job market

Rachel Reeves has been urged not to do ‘any further damage’ to jobs as the number of people looking for work rises at the fastest rate since the depths of the pandemic.

As speculation mounts over yet more tax hikes in the autumn Budget in November, recruitment experts pleaded with the Chancellor to ease pressure on employers to boost hiring.

But leading accountancy group KPMG said ‘speculation’ about Labour’s Budget plans – such as higher taxes and more borrowing – meant job prospects were unlikely to improve any time soon.

The warnings, in a report by KPMG and the Recruitment and Employment Confederation (REC), came as Britain is gripped by weak economic growth, rising unemployment and a fresh surge in inflation.

Concerns about the outlook have sent government borrowing costs soaring on global bond markets.

Rachel Reeves has been urged not to do ‘any further damage’ to jobs as the number of people looking for work rises at the fastest rate since the depths of the pandemic

The KPMG-REC report published today said the number of people looking for jobs is rising at its fastest rate since November 2020 as firms shed staff and put hiring on hold. The findings fuelled fears over the economic outlook as the Bank of England warned jobs are being axed at a pace not seen since 2021.

While firms grapple with Labour’s £25billion National Insurance tax raid and an inflation-busting hike in the minimum wage, they are also turning to artificial intelligence to replace staff.

Jon Holt, chief executive and senior partner at KPMG in the UK, said: ‘It’s unlikely we’ll see a significant shift in recruitment patterns in the near term as businesses evaluate their investment strategies in response to policy commitments and the rapid pace of change brought by AI and new technologies.’

Businesses are also concerned about the impact of Labour’s workers’ rights bill, championed by Angela Rayner, who was last week forced to quit government.

Neil Carberry, chief executive of the REC, said: ‘All eyes are now on the Autumn Budget, in hope that the Chancellor won’t do any further damage to the labour market with costs on hiring. For the economy to thrive, the Budget must recognise the need for investment in people.’ 

On some estimates, Labour faces a black hole of £50billion in the Budget on November 26, though others put the gap at £20billion to £30billion.

Meanwhile, boss of accountancy firm PWC UK Marco Amitrano, said he would hire fewer graduates this year. He told the Sunday Times: ‘Many businesses – both domestic and international – are watching and waiting.’