Employment growth within Britain’s small and medium sized enterprises (SMEs) fell drastically last month in the run-up to the Autumn Budget’s tax hike on employers.
The rolling six-month average for annual employment growth in full-time jobs dropped to 2.6 per cent at the end October, down from 12.8 per cent in October of last year, according to a report shared exclusively with City AM.
The report, generated by Employment Hero, analysed October’s most recent employment data across over 90,000 SME employees from the Office for National Statistics (ONS).
The decline comes following a slew of tax hikes revealed in the Budget on 30 October, where Chancellor Rachel Reeves announced an increase of 1.2 per cent to employers’ National Insurance Contributions (NICs).
The increase now takes employers’ NI contributions up to a total of 15 per cent, despite warning signs of reduced hiring activity among businesses in the weeks leading up to the announcement.
“These figures should be a wake up call to the Government,” Kevin Fitzgerald, Employment Hero UK MD, said.
“Employment growth is already shrinking at our small and medium firms and the tax hike on job creators is only going to make things worse,” Fitzgerald added.
September and October both witnessed a “slight recovery” in full-time job growth following a freeze caused by the uncertainty of the 4 July General Election, the report highlighted.
The recovery means employment growth will “likely” flat line through the new year.
“We need consistent job growth to keep our economy moving forward – staying flat will only mean more people out of work as our population continues to grow,” Fitzgerald said.
He added: “The National Insurance hike will make many small business owners think twice about creating new roles, just as employment growth is naturally cooling off.
“The Government talks about supporting small business growth, but this policy does the opposite – it makes hiring more expensive just when SMEs need all the help they can get.”