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Half of UK businesses will cut jobs and two-thirds will hire fewer staff, according to the head of the UK's main business lobby group.
CBI chief Rain Newton-Smith said Labor chancellor Rachel Reeves' budget has hit businesses, forcing them to consider spending on recruitment.
“Some of the decisions made in the budget have made it harder for businesses to invest, take risks for people and create more jobs,” Ms Newton Smith said. “Our survey showed that half are now looking to reduce their workforce. “Almost two-thirds are looking to cut their hiring plans.”
He added that executives are asking themselves: “Can we afford to invest? Can we afford to expand? Can we afford to take risks with new people?
“Long after the budget, the answer we hear from so many businesses is still 'not yet'.”
In the October Budget, Ms Reeves announced a nearly £70bn increase in public spending, partly funded by sharp rises in business taxes such as employers' national insurance contributions.
Labor also raised the minimum wage and pledged to make it harder to fire workers.
In response, retailers such as Tesco, Sainsbury's and Marks & Spencer have warned they will face a £7bn increase in costs due to tax rises, which include an increase in employers' national insurance, and said the loss of jobs was “inevitable.”
Max Mosley, senior economist at the National Institute of Economics and Social Research, said the UK's economic participation rate remains one of the best in the world “and is something we should be very proud of”.
The United Kingdom's goal is for 80 percent of its population to have a job, which would put it among the top countries in the world, he said.
While employers may make noise about the additional costs, there may be no need to cut jobs. This is because they still make decent profit margins, despite the high inflation of recent years.
“On the other hand,” he said, “companies point out that there have been successive shocks” that they must overcome, such as cost increases, minimum wage increases, the pandemic and other unwanted surprises, “so I sympathize a little.”
If job cuts occur, it will increase an unemployment rate that has been rising slowly, albeit from a low starting point.
Unemployment in the UK, at 4.3 per cent, is not far from the lowest rates ever, although it is slowly rising, according to data from the Office for National Statistics. It still means that around 1.5 million people are out of work.
Rates of 3.6 percent were recorded in the summer of 2022, just above the historic low of 3.4 percent in 1973.
Unemployment was persistently high throughout the 1980s and most of the 1990s, remaining above 6 percent between 1980 and 1997 and peaking at 11.9 percent in 1984.
It rose again in the wake of the financial crisis, reaching 8.5 percent in 2011, but then fell to less than 4 percent in 2019 before the pandemic caused another spike.
Unemployment figures only cover people looking for work. A major concern for the government is the number of people of working age who are economically inactive.
Many are students, but many more are sick. Since the pandemic, fewer Britons as a percentage of the population have returned to work compared to other G7 countries such as Germany and the United States.
The government's spending watchdog, the Office for Budget Responsibility, has suggested that being sick after the pandemic has hit the UK harder than other countries.
But these figures could be bleaker than reality, according to the Resolution Foundation think tank, which estimates that official statistics may have “lost” 1 million workers, making the actual statistics considerably less dire.
It points to the good number of vacancies available, suggesting that unemployment may not be as bad as feared, while offering a glimmer of hope for those who may be out of work.
While down from its peak of more than 1.3 million in 2022, there are still 831,000 job openings in the labor market, higher than pre-pandemic levels.
A government spokesperson said: “Last month we tabled a single budget in parliament to wipe the slate clean and deliver change by investing to repair the NHS and rebuild Britain, while ensuring workers do not face higher taxes on their jobs. payrolls.
“That meant difficult decisions to repair public finances and put them on a firmer footing. However, the alternatives were more austerity, more decline and more instability that would have left companies and workers worse off.
“Despite the difficult legacy, the Government is determined to pursue growth and work in partnership with businesses to invest in Britain's future so we can improve the lot of every part of the country. “That is why the government is reforming the planning system, tackling barriers to trade and delivering on the £63bn of private sector investment announced at the International Investment Summit.”
