The number of employees outside London has fallen significantly after Chancellor Rachel Reeves unveiled her first budget, leaving regional businesses struggling to keep costs in check.
Recruitment agency Robert Walters reported a 45% drop in commission income from operations outside the capital during the final quarter of 2024, while London revenue rose 3%.
The company attributed the decline to a slowdown in hiring due to Ms Reeves’ tax measures, including a £25 billion increase in employers’ social security contributions. Toby Fowlston, CEO of Robert Walters, said the surcharge “has been a dent for employers, and it is clear those costs need to be absorbed.”
A trade update showed the October 30 budget hit business confidence and dampened employers’ hiring plans in the final months of 2024. The Institute of Directors reported that business confidence had fallen to its lowest level since the first Covid lockdown in December 2024.
Mr Fowlston noted that employee confidence has also taken a hit as many workers who secured “premium salaries” during the post-pandemic hiring boom are reluctant to switch roles in an uncertain market. “If you put yourself in an employee’s shoes, they think: I have a good salary, the market is volatile, why should I move?” he explained.
He added that Labour’s plans to overhaul UK employment law could increase pressure on the UK labor market. “Further cost increases” for employers would be “critical” for Labor to tackle in partnership with business, he warned, warning that reforms – especially around zero-hours contracts – could have unintended negative consequences.