A closely-watched business survey has revealed that private sector job cuts are accelerating at the fastest pace since February, as Labour's national insurance hike continues to damage the economy. The purchasing managers' index (PMI) report indicates that staffing numbers have fallen for the tenth consecutive month, driven by hiring freezes and redundancies.
The survey, conducted by S&P Global Market Intelligence, found that overall private sector activity remains sluggish, with the economy on course for growth of just 0.1% in the current quarter. Chris Williamson, chief business economist at S&P Global, said firms are facing worsening order books, subdued confidence, and rising costs, all widely linked to the ongoing impact of the Budget measures.
Chancellor Rachel Reeves has insisted she is making Britain 'better off', but the data suggests otherwise. The £25 billion raid on employer national insurance, combined with a sharp rise in the minimum wage, is squeezing profits and making it harder to hire. Charlie Nunn, chief executive of Lloyds Banking Group, warned that any further tax raid on the City would not be consistent with boosting growth.
Separate figures from the Confederation of British Industry (CBI) show challenging conditions for manufacturers, with firms cutting jobs and holding back on investment. Meanwhile, GfK data points to a fall in consumer confidence, with households sensing 'stormy conditions ahead'. Inflation remains at a one-and-a-half-year high, unemployment is at a four-year high, and borrowing is surging.
James Smith, UK economist at ING Bank, described the jobs market as being in an 'ominous state', which should push the Bank of England towards cutting interest rates next month. The bleak economic figures have darkened the outlook for the Chancellor this summer.
