Britain's Labour Market Hits 15-Year Low Amid Economic Stagnation
Britain's employment landscape has deteriorated to its weakest state in fifteen years, according to fresh evidence highlighting the economy's sluggish performance under the Labour government. The latest figures from accountants BDO reveal a concerning trend where employers, while retaining existing staff, show extreme reluctance to hire new workers or commit to investment.
Recruitment Industry Sounds Alarm
This troubling pattern coincides with separate polling data from the Recruitment and Employment Confederation (REC), which indicates that the decline in new permanent job roles has persisted into the new year. The recruitment industry body has issued a stark warning, urging the government to alter its policy direction to prevent a further escalation in unemployment, which already stands at a post-pandemic peak of 5.1 percent.
These reports deliver a significant blow to Chancellor Rachel Reeves's assertion that the economy would begin to recover this year. Instead, a combination of tax increases, minimum wage hikes, and an array of new workers' rights legislation is applying substantial pressure on Britain's already struggling businesses.
Bank of England Downgrades Growth Forecast
Last week, the Bank of England compounded these concerns by revising its GDP growth forecast for the year down to a mere 0.9 percent. The central bank also projected that unemployment would climb to 5.3 percent, potentially adding over 70,000 individuals to the jobless count.
BDO's comprehensive report explicitly points to "continued weakness in labour market conditions." The firm's employment index, which tracks critical indicators such as hiring intentions and corporate job numbers, fell for the third consecutive month in January, reaching its lowest level since March 2011.
Businesses Prioritise Cost Control Over Expansion
The survey, encompassing responses from 4,000 firms, found that demand for staff remains feeble as employers overwhelmingly prioritise "cost control and resilience" over expansion. Hopes that clarity from the upcoming Budget would stimulate the jobs market have yet to materialise, according to the findings.
Scott Knight, Head of Growth at BDO, commented: "What we're witnessing is a low-hire, low-fire labour market. Businesses are holding on to staff where possible, but they are extremely hesitant to hire or invest while underlying economic conditions remain persistently weak."
Permanent Placements and Vacancies Continue to Fall
Simultaneously, the REC's findings indicate a further decline in permanent job placements during January, with vacancies also continuing to decrease. Neil Carberry, Chief Executive of the REC, emphasised the complex decisions facing firms.
He stated: "The decisions companies are now making involve numerous trade-offs, such as whether to create jobs in the UK or overseas, or determining which roles require a human touch versus an automated solution. A growing, inclusive economy depends on high employment levels. A focus on encouraging firms to create jobs, rather than discouraging that investment, is more crucial than ever."
Carberry added a pointed critique: "Thus far, the Government has struggled to convince businesses it genuinely wants them to hire. This must change in the policy decisions made this year if we are to avert a continued rise in unemployment."
