Businesses Face Job Cuts and Slow Hiring Ahead of Budget Tax Rise

Recent surveys indicate that many companies have been reducing their workforce and halting new recruitment, reaching the lowest levels seen in over ten years. This trend is unfolding just as significant tax increases are poised to take effect in April, when employers face a dramatic rise in National Insurance contributions. The proposed policy shift involves raising the primary NIC rate from 13.8% to 15% and lowering the earnings threshold for these contributions from £9,100 to £5,000 annually.

Business leaders have expressed deep concern about these developments. Critics argue that the tax increases will heighten hiring costs, particularly affecting low-paid employees, and could stifle growth and job creation. High-profile figures within the opposition compare the current economic policies to those of past eras marked by economic stagnation, warning of a return to harsher economic times.

Further compounding the issue, recent data from accounting and advisory firms show that private sector employment has dropped to its lowest levels since 2012, and business confidence is at a two-year low. Additional insights from recruitment experts reveal that even during the pandemic there were fewer job vacancies, a trend that suggests businesses continue to tread cautiously amid fiscal uncertainty.

The Bank of England has added to these concerns by lowering its growth forecast for 2025 and predicting increases in both inflation and unemployment. Officials from the government, however, maintain that their policy measures are designed to foster growth, improve economic stability, and provide businesses with certainty through tax and investment initiatives.