Pay growth has slowed to its lowest pace since February 2021 as bosses warn Rachel Reeves’ Budget tax raid will hit hiring.

Permanent wage growth dropped from 52.8 in September to nearly a four-year low of 52.5 in October, just before the Chancellor’s Autumn Statement, according to the KPMG and REC UK Report on Jobs index.

Demand for staff fell for the twelfth month in a row in October while permanent job placements slumped at the fastest pace since March as some firms imposed recruitment freezes ahead of the Budget.

Ms Reeves announced a widely trailed increase in employer National Insurance contributions (Nics) as part of the largest tax-raising Budget on record.

Jon Holt, group chief executive and UK senior partner at KPMG, said: “With many of the tax rises announced in last week’s Budget impacting businesses, the expectation from some chief execs is that this could further dampen hiring as companies grapple with absorbing any extra costs.”

Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC) warned that demand for new staff has weakened since the election.

Mr Carberry said: “Things now stand in the balance – firms need to be persuaded to invest, with recent changes to NI thresholds, the minimum wage and prospective changes to employment law all causing concern.”

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