Businesses shed jobs at the fastest pace in four years last month after higher employment costs and mounting uncertainty from the autumn budget dented confidence, according to the latest S&P Global data.
Excluding pandemic-era figures, the decline in headcount was the sharpest in over 15 years, with nearly a quarter of firms either laying off workers or freezing recruitment.
The closely watched final composite purchasing managers’ index (PMI) dipped to 50.4 in December from 50.5 in November, just above the 50-point mark that separates growth from contraction. This was slightly below analysts’ forecasts and the lowest reading since October 2023.
Chancellor Rachel Reeves’s tax changes, announced in October, have contributed to reduced hiring. Employer national insurance contributions (NICs) rose from 13.8% to 15%, while the threshold for the tax was lowered from £9,100 to £5,000 – collectively a £25 billion rise for businesses.
Thomas Pugh, an economist at consultancy RSM UK, said the slowdown in private sector job creation is “the clearest signal yet that firms were responding to the increase in labour costs by slowing hiring”.
Support authors and subscribe to content
This is premium stuff. Subscribe to read the entire article.
