Jobs Market Hits The Breaks

PM uncertainty spooks small firms 

The UK’s small and micro businesses are facing yet another confidence‑crushing blow as new research shows the job market has slumped. Employers are hitting pause on hiring while they wait to see what an Andy Burnham premiership will mean for taxes, costs and growth.

Nothing stifles growth more than uncertainty. Fims need confidence if they are to surge ahead with plans and uncertainly is the death knell for confidence.

According to new figures from Recruiter Morgan McKinley available jobs in London dropped 5% in the last quarter and professional vacancies fell to 4,636, down 3% on the year. Across the UK, the picture is even bleaker. A British Chambers of Commerce (BCC) survey found:

• Less than a quarter of firms plan to hire

• One in ten expect to cut staff

• Three‑quarters can’t find the workers they need

For small businesses already battling rising costs, tax hikes and employment law changes, this is a nightmare.

Businesses fear more tax rises

Employers freeze every kind of investment when there’s political uncertainty and the gap between Keir Starmer’s resignation and Burnham’s expected arrival in No.10 has created political uncertainty. The next period of worrying uncertainty will be the gap between Andy becoming PM and his first budget when there’s hours of speculation over what will be announced and how it will affect small and micro businesses in particular.

Despite the fact that Andy Burnham has been talking positively about help for small businesses they don’t know for sure what taxes he may raise so they’re not hiring.

Big spending plans, big tax questions

Burnham has already trailed huge spending commitments, including the HS2 Manchester leg, nationalising utility firms and compensation for WASPI women.

All of this must fit inside Rachel Reeves’ strict fiscal rules, meaning higher taxes are back on the table, and small businesses are worried about that given they are already stretched beyond the limit.

Small firms can’t take any more costs

The BCC says rising employment costs, including employer National Insurance and new employment law changes, are pushing small firms to the brink: “If the next Prime Minister is serious about unlocking growth, helping businesses invest in skills must be at the heart of their plan.”

Right now, small firms feel they can’t invest in people, training, equipment or expansion because they don’t know what tax bombshell may be coming next.

The economy’s stuck in first gear

The IMF recently nudged the UK’s growth forecast up but only to 1%. Inflation is expected to fall back to 2% next year, which is good news if it happens, but small businesses say it’s meaningless if:

• taxes rise

• hiring stalls

• costs keep climbing

• political uncertainty continues

Growth needs confidence and that’s sorry missing with predictable effects.

Three‑quarters of firms can’t find staff

Even businesses that want to hire can’t. According to the BCC three quarters are struggling to recruit with shortages in construction, hospitality, retail, logistics, care and professional services. Small firms are losing contracts because they can’t find the right people to deliver them. It’s a double hit because firms can’t afford to hire and can’t find people even if they could.

Stalled

Britain’s jobs market is stalling, and small and micro businesses are taking the hit, and they’re stuck in limbo under they know what the new PM’s tax plans are.

If the new PM wants growth, he must:

• cut employment costs

• support skills

• stabilise taxes

• give small firms clarity

• stop the constant policy churn

In the meantime, the UK’s small businesses aren’t just pausing hiring, they’re pausing productivity increases, growth and hope, all the things the Government needs for a thriving economy.