“How long before Starmer’s government realises that choking businesses with red tape, tax hikes, and union power grabs isn’t a recipe for prosperity?”

Britain’s job market is plummeting faster than a deflating bouncy castle, as new openings drop at their fastest pace since the pandemic—and bosses are pointing the finger squarely at Labour’s anti-business Budget.

According to the latest KPMG and Recruitment & Employment Confederation (REC) survey, the number of permanent vacancies in the UK fell again in January, with the drop accelerating to levels not seen since August 2020. Even temp work took a hammering, as companies slammed the brakes on hiring.

LABOUR’S TAX RAID TO BLAME

The culprits? Rachel Reeves’s tax raid on employers’ National Insurance contributions and Angela Rayner’s crackdown on workers’ rights, say business chiefs.

From April, firms face a £25 billion collective hike in National Insurance, with companies forced to pay 15% of workers’ salaries on earnings above £175 per week. Meanwhile, Labour is pushing through sweeping changes to employment law, including banning zero-hours contracts, making sick pay mandatory from day one, and handing more power to unions.

Neil Carberry, chief executive of the REC, told The Telegraph: 

“Businesses entered the year uncertain on the growth path, and that has driven a ‘wait and see’ approach to hiring. An autumn of fiscal gloom, difficulty navigating significant upcoming tax rises and little progress on the practicalities of a costly new approach to employment rights are all acting as brakes on progress.”

ECONOMIC MELTDOWN UNDER LABOUR?

The findings add to mounting evidence that Labour has killed economic momentum since seizing power, with critics accusing ministers of crippling businesses and talking down Britain’s economy.

The Bank of England last week slashed its growth forecast in half, predicting the UK will grow by just 0.75% in 2025, down from the 1.5% expected before Labour took over. Unemployment is set to rise to 4.75% by the end of the year, with hiring freezes spreading across all job sectors.

Even the Bank of England’s interest rate cut to 4.5% last week—intended to boost confidence—hasn’t been enough to turn the tide.

Jon Holt, chief executive of KPMG, warned: 

“Businesses continue to hold back on recruitment, leading to permanent and temporary placements falling steeply again in January.

“It is unlikely that we will see any significant improvements in the survey data over the near term, as hiring stays muted and staff availability continues to rise.”

The hiring crisis is hitting hardest in the North, where businesses have been most affected by Labour’s economic squeeze.

BUSINESSES SOUND THE ALARM

While Rachel Reeves and Keir Starmer have spent recent weeks desperately trying to reposition Labour as “pro-growth”, their actions tell a different story. 

Carberry warned: “It takes time and real action to build business confidence. Firms are slowing investment until they see more momentum in the economy.”

And with pay rises slowing to their weakest pace since the Covid Pandemic, thanks to job cuts and economic uncertainty, workers are feeling the squeeze too.

So, as businesses scrap hiring plans and economic growth flatlines under Labour’s watch, the big question remains—how long before Starmer’s government realises that choking businesses with red tape, tax hikes, and union power grabs isn’t a recipe for prosperity?