Job openings in the UK have seen their steepest decline since the pandemic, with permanent vacancies dropping for the 15th consecutive month, according to KPMG and the Recruitment and Employment Confederation (REC). The KPMG/REC vacancy index fell from 42.9 in December to 41.6 in January on an index where a reading below 50 means more recruiters believe the market is weakening than improving. Tax increases set out in the Budget have contributed to this downturn, with businesses facing a combined hit of around £25bn from a hike in employers’ National Insurance contributions. Jon Holt, chief executive of KPMG, noted that recruitment is unlikely to improve soon, warning: “It is unlikely that we will see any significant improvements in the survey data over the near term, as hiring stays muted and staff availability continues to rise.”

Toby Fowlston, CEO of recruitment company Robert Walters, has highlighted a significant downturn in recruitment amid a decline in corporate confidence. He also warned that firms have grown increasingly selective, noting: “Back in 2021 and 2022 on average clients were looking at maybe up to four interviews before making a decision on hiring an individual. If we fast forward to today that’s more like eight to 10 interviews.” The decline in hiring is attributed to a combination of factors, including the Chancellor’s £25bn tax increase on employers and the upcoming Employment Rights Bill, which is expected to impose full rights from day one in a job, a greater entitlement to flexible work, a crack down on zero-hour contracts, broader eligibility for sick pay and extra union powers. The Institute of Directors has warned that a decline in business confidence has seen firms ease back on pay rises, sack staff and raise prices to cope with the National Insurance increase, while the Federation of Small Businesses has warned that two-thirds of its members are planning to hire fewer people because of extra red tape around employment.

Business optimism in the UK reached a two-year low in January, according to analysis by BDO. The firm’s index measuring confidence across British manufacturing fell to 92.20 from 93.41 in December, marking the fourth consecutive month of decline and the lowest level since January 2023. BDO partner Kaley Crossthwaite said: “Our report shows that supporting growth and addressing workforce challenges need to be a key priority for the year ahead.” The decline in confidence is attributed to Government plans to increase both employer National Insurance contributions and the minimum wage.

Profit warnings among UK-listed companies with traditional pension scheme liabilities have reached a four-year high, according to a study by EY-Parthenon. Last year, 81 companies operating defined benefit (DB) schemes issued warnings, representing one in four of all listed DB sponsors. The construction, household goods, retail, and industrial support services sectors were particularly affected. The trend worsened in the final quarter, with 28 sponsors issuing warnings. Factors contributing to these warnings include rising costs and tougher credit conditions, leading to tensions between sponsors eager to unlock surpluses and cautious trustees. The Government recently proposed easing rules for accessing surpluses, which have increased due to rising bond yields.

National Audit Office (NAO) analysis shows that the UK’s increasingly complex tax system is imposing significant administrative costs on both the Government and businesses. HMRC’s administration costs for running the tax system rose by 15% – or £563m – in real terms between 2019/20 and 2023/24 to reach £4.3bn, while tax revenue increased at a similar rate, according to the NAO. Looking ahead, administrative expenses are projected to increase by £875m due to new tax rules and fraud detection efforts. The report also notes that “poor customer service performance” created “additional cost” for HMRC and taxpayers. Gareth Davies, head of the NAO, said: “Businesses and individuals deserve a modern, resilient and effective tax system to help them get their tax right first time.” Reflecting on the report’s findings, Sir Geoffrey Clifton-Brown, chair of the Public Accounts Committee, said: “Public trust in HMRC is being eroded as taxpayers find it difficult to deal with HMRC.” Meanwhile, the analysis shows that the number of people paying income tax surged by 4.5m, with this driven by fiscal drag from frozen tax thresholds.

Highlighting that the number of companies listed in London continued to decline in 2024 and UK funds saw their worst year on record, Dru Danford, head of investment banking at Panmure Liberum, says the best way to deliver more inward investment is to create an environment that encourages investment. He proposes a “true revolution in pension saving,” that would see them made “simpler, more transparent, more tax advantageous.” Mr Danford says higher employment taxes on businesses have made firms less profitable and will reduce employment and consumer confidence. He notes: “Capital gains tax rates have increased, IHT tax benefits for certain investments have been reduced, pensions are now going to be subject to inheritance tax, and overall taxes have risen to make the UK one of the highest tax takers in the OECD.” All of this, he adds, “will constrain growth.”

Recent figures indicate that higher earners are increasingly opting to reduce their take-home pay to navigate punitive tax rates. When income exceeds £100,000, individuals begin to lose their £12,570 tax-free personal allowance, leading to effective tax rates that can soar to nearly 600% on additional earnings. Myron Jobson from Interactive Investor, says: “Some, where possible, are opting for salary sacrifice schemes where you can ask your employer to pay more into your pension instead of increasing your taxable income.” This strategy not only lowers taxable income but also enhances pension contributions.

Research by the Kauffman Foundation indicates that female-led tech teams yield 35% higher returns than their male counterparts. However, analysis from research firm Beauhurst shows that female-founded teams received only £145m in the first half of 2024, with this representing just 1.8% of the £8bn total UK equity investment, with all-male teams securing £6.92bn. Kauffman also found that just 5% of angel and VC investors in Europe are women, while male investors are half as likely to fund a woman as a female investor would be. Venture capital firm First Round Capital notes that analysis of its 300 investments over ten years shows that the female-founded firms it backed did 63% better than its all-male businesses.

The corporate landscape is witnessing an unprecedented wave of CEO departures, with data from the headhunting firm Russell Reynolds Associates showing that 202 CEOs stepped down in 2024, a 9% increase from the previous year. This is partly attributed to the economic climate, with Laura Sanderson of Russell Reynolds saying “increased volatility … has made the role harder, more relentless and higher pressure.” Activist investors are also playing their part, agitating for change in a bid to revive share prices. Meanwhile, analysis from stockbroker AJ Bell shows that nearly a dozen listed CFOs have already stepped down this year. The report also shows that the average tenure of a CFO is down by 20% to just four years. David Anderson, a partner in Deloitte’s finance department, says: “The CFO’s job would be much easier to manage if it were neatly defined,” adding: “The reality? The CFO’s role is continuing to expand far beyond their traditional responsibilities.”

Economic modelling suggests that Donald Trump’s tax plans could hit the UK economy to the tune of £18bn, with the President vowing to cut corporation tax rates in the US and reject the OECD’s minimum tax deal. While corporation tax in the UK stands at 25%, Mr Trump has pledged to cut the US’ corporate tax rate from 21% to at least 15%. Analysis suggests that if Mr Trump were to cut business taxes so heavily, it would hit American investment in the UK. The Prosperity Institute said that if the US government cuts corporate tax to 14% – a point below the OECD’s minimum threshold of 15% – foreign direct investment from the US to the British economy would fall by up to £18.2bn between now and 2030/31. This, it added, would negatively impact the UK’s GDP by 0.1% over the same period, representing a hit of around £3.4bn. A Treasury spokesman said: “The UK has been recently recognised as the second most attractive investment destination in the world,” adding: “Our competitive tax system is just one way we are going further and faster to kick-start that economic growth.”

The Bank of England’s chief economist says there remains “reason for caution” on cutting interest rates, pointing to underlying price pressures and highlighting a “surprising” surge in wage growth at the end of 2024. With private sector wage growth climbing 6% in the three months to November, Huw Pill said: “I think that is a reason for caution, for carefulness in the way we proceed with removing monetary policy restriction and cutting bank rate.” Urging caution on “rushing” to cut rates while inflationary pressures persist in the economy, he added: “We’re not in a situation where we can declare job done.”

The Round, a £2bn development in London, is aiming at attracting Gen Z workers to the office by focussing on wellbeing. Designed by Foster + Partners, the project will feature hot and cold therapy rooms, napping pods, and digital detox spaces, alongside traditional amenities like a gym and pool. The development will replace the former Sainsbury’s headquarters at Bankside and will include a 45-storey office building and two residential towers, totalling 433 homes.