It was reported that almost one in four British businesses cut jobs in December amid widespread pessimism over the squeeze on their finances from Labor’s tax-raising budget.
S&P Global’s purchasing managers’ index (PMI) confirmed that the private sector stagnated at the end of 2024 with the weakest growth in 14 months. The final reading was at 50.4, slightly below the flash score of 50.5.
The closely watched survey showed that firms shed jobs at the fastest pace in more than 15 years — when excluding the pandemic — after Chancellor of the Exchequer Rachel Reeves hiked a major payroll tax in her Oct 30 budget. Some 23% of employers said they’d reduced headcount.
Businesses previously warned that the £26 billion national insurance raid would lower wage growth, limit hiring and push up prices, and December’s PMI is the latest survey to show the effect on jobs.
Confidence has slumped to its lowest level since the aftermath of former prime minister Liz Truss’s disastrous mini-budget, according to a poll published by the British Chambers of Commerce on Sunday night.
Labor has said it needs to raise taxes to stabilise the public finances and pump more money into crumbling frontline services.
“Concerns about the impact of rising payroll costs, alongside a general unease about the climate for business investment, were reported as the main factors weighing on prospects for growth in 2025,” said Tim Moore, economics director at S&P Global Market Intelligence. He said business optimism had failed to bounce back from the budget, with expectations for growth stuck at the two-year low. – Bloomberg
