James Reed, head of Britain's largest recruiter, warns of a dire job market and urges the government to reverse the national insurance hike to stimulate economic growth. Reed compares the situation to a 'slow-motion car crash' and cites a significant decline in job vacancies. He emphasizes the need for a business boost and questions the government's decision to raise national insurance instead of corporation tax.
James Reed, the head of Britain's largest recruiter, has issued a stark warning to the government, urging them to reverse the national insurance hike to stimulate economic growth . Speaking to LBC's Andrew Marr, Reed characterized the UK's current job market as an 'accelerating car crash,' primarily driven by what he calls the 'jobs tax.
' He pointed to the increase in employers' national insurance, announced by Labour in October's Budget but scheduled for implementation in April, as a contributing factor to a loss of confidence among businesses. This sentiment, he compared, echoes the aftermath of the 2008 financial crisis.Reed cited a 24% year-on-year decline in UK job vacancies in 2024, which he said accelerated to 29% year-on-year in the first weeks of 2025. He expressed concern about the deteriorating job market, stating, 'It's looking quite bad, I'm sorry to say that, because I'd rather it wasn't.' He added, 'A little while ago I said we're in danger of a slow-moving car wreck in the jobs market. Unfortunately, that seems to be accelerating. So the jobs market is in poor health.'These warnings come as Keir Starmer, the Labour Prime Minister, has repeatedly emphasized growth as his government's top priority. He met with CEOs of Britain's largest companies on Tuesday, assuring them that the country is witnessing an economic turnaround despite mounting pressure on his administration due to a largely stagnant economy. Starmer pledged to 'hard wire growth into all decisions in the cabinet,' hinting at support for the controversial Heathrow expansion as a means to bolster economic activity. Meanwhile, Chancellor Rachel Reeves is set to deliver a major pro-growth speech tomorrow, fueling anticipation for potential policy announcements aimed at addressing the current economic challenges.Reed argued that businesses have been 'spooked' by the October Budget, particularly by the National Insurance jobs tax. He noted a shift in business sentiment, with many clients withdrawing job vacancies or adopting a wait-and-see approach. He further asserted that this preemptive impact will likely intensify when the tax takes effect in spring, potentially causing greater economic harm. Reed also questioned the government's decision to raise national insurance instead of corporation tax, stating that both would ultimately affect company profitability. However, he emphasized that the NI hike has created 'a million black holes in company balance sheets,' leading businesses to mitigate the impact through measures like job cuts, hiring freezes, wage stagnation, and price increases, all of which are detrimental to the economy.Reed recalled the current job market as being as dire as he could remember, drawing parallels to the 2008/2009 recession. He acknowledged external factors beyond government control that could exacerbate or alleviate the situation, but stressed the importance of government intervention to stimulate economic recovery.The meeting with business leaders included prominent figures from companies like Tesco, BT, Unilever, Nationwide, BAE Systems, and Lloyds Bank. Starmer also hinted at his support for a third runway at Heathrow Airport, despite a major internal debate within the government regarding the expansion.Refusing to confirm the widely anticipated announcement on Heathrow expansion, Starmer emphasized his government's commitment to pro-growth policies. When questioned about balancing growth with net zero commitments, he stated, 'I'm not going to speculate about Heathrow and any decision there. What I will say is that growth is the number one priority, wealth creation, making sure that people are better off. Of course, we also have climate commitments but growth is really important too.'Starmer further outlined changes to cabinet decision-making processes, asserting that all policies must demonstrate their contribution to growth before gaining approval. He told business executives, 'Everything has to be seen through the question of whether it is pro-growth.' Downing Street confirmed that in the future, all cabinet ministers would be required to 'set out the growth credentials of new policies in order to get approval from their cabinet colleagues.
National Insurance Economic Growth Jobs Market Labour Government Heathrow Expansion Business Confidence
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