In the United Kingdom, businesses lost steam and pulled back on hiring in November.
The mentioned actions are related to the fact that the industry reacted to the sharp increase in taxes provided by the UK Labour government’s budget. In November, business confidence in the United Kingdom was recorded at a level that is the lowest since January last year. The relevant information was published on Monday, December 9, by the advisory and accountancy company BDO.
BDO’s Optimism Index fell by 5.81 points in November. The corresponding indicator was fixed at 93.49. It is also worth noting separately that in this case there is the most intense decrease in figure on a monthly basis since August 2021.
BDO said that the mentioned drop recorded in November in both the manufacturing and services sectors likely reflects businesses’ immediate reaction to the announcements in the Autumn budget.
In October, United Kingdom Finance Minister Rachel Reeves delivered the Autumn budget, which included tax growth. In this case, the focus was on an increase to the National Insurance (NI) payroll tax paid by employers and an uptick in the National Living Wage. In October, businesses demonstrated consternation about the mentioned intentions. In the context of the relevant assessment, it was separately noted that measures initially aimed at boosting economic growth will instead cause inflation to accelerate and hiring to slow down.
The BOD report drew attention to the increase in costs, decrease in orders, and continuing problems in the UK labor market as the main issues faced by businesses. It was also noted that despite businesses pinning their hopes on the prospect of further interest rate cuts early next year, cost pressures, including higher National Insurance Contributions, could offset any positive effects, leaving a mixed future picture.
In November, the number of job vacancies in the United Kingdom showed such a rate of decline, which turned out to be the fastest since the beginning of the coronavirus pandemic. This is evidenced by fresh monthly job market data from accountancy firm KPMG and the Recruitment and Employment Confederation (REC).
The demand for staff declined sharply and at an accelerated pace in the United Kingdom last month. This dynamic turned out to be the most intense since August 200.
Jon Holt, group chief executive at KPMG, said businesses should weigh the prospect of increasing employee costs following the budget, which has led to an accelerated decline in hiring activity across the board.
The drop, which was particularly pronounced among permanent workers, was recorded against the backdrop of a wider slowdown in the UK labor market. Currently, according to media reports, the expectation among experts is that the UK economic system will continue to show cooling in the short term after a long period of a high cost of borrowings.
Bank of England Governor Andrew Bailey said last month that employers were right in the context of their warnings about possible job cuts as a result of the Labour government’s budget.
In a November report the British Retail Consortium wrote Rachel Reeves. In this case, there was a warning that retailers would face a 2.3 billion pound ($2.93 billion) bill when the National Insurance increase takes effect next April.
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