Employers are stepping up the pace of job cuts as Labour’s national insurance raid delivers ‘sustained’ damage, figures show.
A closely-watched business survey found private sector staff numbers are decreasing at the fastest pace since February.
And wider activity remains ‘sluggish’, meaning the economy is on course to eke out only meagre growth over the summer, according to the purchasing managers’ index (PMI) report.
It is the latest grim indictment of Labour’s record – even as Chancellor Rachel Reeves continues to insist she is making Britain ‘better off’.
Instead, there is increasing evidence that her £25 billion raid on employer national insurance – alongside a sharp rise in the minimum wage – is squeezing profits and making it harder to hire staff.
It came as Charlie Nunn, chief executive of Lloyds Banking Group, warned that a potential tax raid on the City in the autumn – as Ms Reeves seeks to shore up deteriorating public finances – would not be ‘consistent’ with boosting growth.
Chris Williamson, chief business economist at S&P Global Market Intelligence, which conducted the PMI survey, said the economy was ‘struggling to expand’.
The reading of private sector activity pointed to growth at a quarterly rate of just 0.1 per cent. And staffing numbers fell for the tenth month in a row amid hiring freezes and redundancies.
Chancellor Rachel Reeves (pictured) continues to insist she is making Britain ‘better off’ but private sector staff members are being cut at the fastest pace since February
Charlie Nunn, (pictured) chief executive of Lloyds Banking Group, warned that a potential tax raid on the City in the autumn
Mr Williamson said firms faced worsening order numbers, subdued business confidence and rising costs ‘all of which were widely linked to the ongoing impact of the policy changes announced in last autumn’s Budget’ as well as wider global uncertainty.
He added: ‘Particularly worrying is the sustained impact of the Budget measures on employment.
‘Higher staffing costs have exacerbated firms’ existing concerns over payroll numbers in the current environment of weak demand, resulting in another month of sharply reduced headcount in July.’
James Smith, UK economist at ING Bank, said the jobs market was in an ‘ominous state’ which should push the Bank of England towards cutting interest rates next month.
Separate figures from the Confederation of British Industry (CBI) showed ‘challenging’ conditions for Britain’s manufacturers, with firms holding back on investment and cutting jobs.
Elsewhere, figures from market research firm GfK pointed to a fall in UK consumer confidence with households ‘sensing stormy conditions ahead’.
Bleak economic figures have darkened the outlook for the Chancellor this summer, with inflation at the highest level in a year and a half, unemployment at a four-year high, and borrowing surging.
