Hiring outside London has experienced a significant decline following Chancellor Rachel Reeves’ first Budget, leaving regional businesses struggling to manage rising costs, according to recruitment firm Robert Walters.
The company reported a 45% fall in fee income from operations outside of London during the final quarter of 2024, while income from London-based operations saw a modest increase of 3%. The sharp regional drop was attributed to a slowdown in hiring activity, which Robert Walters believes was triggered by Reeves’ tax measures, including a £25 billion increase in employers’ National Insurance contributions.
Toby Fowlston, CEO of Robert Walters, stated that the surcharge has been a burden for employers, leading them to absorb the additional costs rather than hire at previous levels. “The tax increase has put a dent in employers’ plans, and they are now more cautious in their hiring,” Fowlston explained.
The trading update from Robert Walters revealed that the business climate grew more uncertain following the 30 October Budget, with the Institute of Directors reporting a steep decline in business confidence. By December 2024, confidence levels had dropped to their lowest point since the first Covid lockdown, highlighting the growing anxiety among employers and business leaders.
Employee confidence also took a hit, with many workers who had secured high-paying jobs during the post-pandemic hiring boom now reluctant to change roles in such an unpredictable market. “If you put yourself in the shoes of an employee, you may think: I’m on a good salary, the market is volatile, so why should I move?” Fowlston noted.
Fowlston also voiced concerns over Labour’s potential overhaul of UK employment law, which could further add pressure to the job market. He cautioned that increasing costs for employers could have serious implications, particularly regarding Labour’s proposed reforms to zero-hours contracts. “Further increases in costs would be critical, and any reforms should be carefully considered in partnership with businesses to avoid negative unintended consequences,” he warned.
As businesses grapple with rising costs and an uncertain future, the hiring landscape remains a key area of concern, especially outside of London where the impact of new tax measures has been most pronounced.
