Job vacancies are falling and the economy is 'cooling', suggesting a recession could be 'imminent', according to the boss of Reed, one of the UK's biggest recruitment firms.
Speaking to the BBC, James Reed said his company had noticed a sharp drop in the number of jobs advertised and urged the government to rethink the recent increase in taxes employers pay on staff salaries.
“We’re like the crow’s nest on a boat,” he said. “We receive vacancies on our website very early, which allows us to see what is happening in the job market.”
The government said it had faced “difficult decisions” but that official forecasts suggested an increase in employment over the next three years.
Vacancies advertised on Reed's website fell 13 percent between October and November, Mr. Reed said Sunday on the Laura Kuenssberg Show.
The number of vacancies is now 26% lower than a year ago, he said, representing a “significant decline.”
“It worries me because when I've seen this in the past, it's been an indication that recession is imminent,” he said.
The British economy contracted in September and October, according to the latest growth figures. Restaurants, pubs and retail – sectors which rely on lower paid staff – recorded weaker months, according to official statistics.
On Tuesday, the latest official employment figures will show whether the recent rise in the UK unemployment rate has continued into October.
Although still moderate by historical standards, unemployment reached 4.3% in September, compared to 4% in the March-May period.
Mr Reed said the budget at the end of October had “scared” businesses, particularly the decision to increase national insurance rates paid by businesses from next April and lower the starting threshold for these payments NI.
The government said the tax increase was necessary to finance excessive spending in ministries, which it blamed on the previous government.
The policy change includes an increase in the allowance for small businesses, protecting many from the increase in NICs.
Mr Reed said the policy simply shifted the deficit onto businesses.
“This big £22 billion black hole that we have heard so much about has become a million black holes in the balance sheets of companies across the country,” Mr Reed said.
He said companies were considering reducing hiring and laying off staff, reducing investments or relocating jobs as a result of the policy.
Shadow chancellor Mel Stride blamed the weakening economy on “the brutal impact of the chancellor's decisions and his continued bashing of the economy”.
A Treasury spokesperson said the government had faced “difficult choices to repair the country's foundations and restore the economic stability it desperately needs”.
The government's official forecaster, the Office of Budget Responsibility, expects the economy to grow next year and employment to increase over the next three years, the spokesperson added.
More than half of employers will pay the same or lower NICs on their staff payroll, according to the Treasury, after an increase in the small business allowance.
