London businesses are hesitant to hire new staff ahead of the Budget due to concerns over potential tax increases, according to a recent survey.
The study, carried out by KPMG, the Recruitment and Employment Confederation (REC), and BusinessLDN, indicates that companies are adopting a cautious stance towards recruitment until there is greater clarity on policy direction, as reported by .
The London permanent placement index, a measure of the rate at which businesses are hiring new staff, dropped to 43.7 in September, compared to a national average of 44.9. A score below 50 signifies contraction, suggesting that London businesses are slowing their hiring pace more rapidly than those elsewhere in the country.
The number of job vacancies also declined more sharply in London than in other parts of the country, with the index standing at 47.3 compared to a national average of 47.6. Concurrently, the survey indicated an increasing number of people unemployed in London.
Muniya Barua, Deputy Chief Executive at BusinessLDN, stated that the "frenzy of Budget speculation" was impacting employers' hiring plans.
"With the number of people out of work in the capital at its highest level in almost three years, the Chancellor needs to do more to get private investment motoring and to get more Londoners into jobs," Barua said.
It is reported that Chancellor Rachel Reeves will raise taxes by approximately £35bn in the Budget, with an increase in employers' national insurance likely to be central to her revenue-raising package.
Business organisations have cautioned that the impending tax increase could dampen hiring and slow wage growth, with potential long-term effects on workers.
"An employer hike in National Insurance will do little to encourage firms to take on new staff," commented Barua.
These concerns arise as the government unveils its new employment legislation, which, according to its analysis, is likely to increase companies' annual costs by approximately £5bn due to the proposed changes.
