Hiring outside London has dropped significantly after Chancellor Rachel Reeves unveiled her first Budget, leaving regional businesses scrambling to contain costs. The recruitment firm Robert Walters reported a 45pc fall in fee income from operations outside the capital during the final quarter of 2024, while London-based income rose by 3pc. The company attributed the decline to a hiring slowdown triggered by Ms Reeves’s tax measures, including a £25bn increase in employers’ National Insurance contributions. Toby Fowlston, chief executive of Robert Walters, said the surcharge “has been a dent to employers, and obviously that cost is needing to be absorbed.” A trading update revealed that the 30 October Budget rattled business confidence and dampened employers’ hiring plans in the closing months of 2024. The Institute of Directors reported that business confidence fell to its lowest level since the first Covid lockdown in December 2024. Mr Fowlston noted that worker confidence has also taken a hit, as many employees who secured “premium salaries” in the post-pandemic hiring boom are hesitant to switch roles in an uncertain market. “If you put yourselves in the shoes of an employee, they’re thinking: I’m on a good salary, the market is volatile, why would I move?” he explained. He added that Labour’s plans to overhaul UK employment law could amplify the pressure on Britain’s jobs market. “Further increases in costs” for employers would be “critical” for Labour to address in collaboration with businesses, he warned, cautioning that reforms—especially around zero-hours contracts—could have unintended negative consequences.

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.