Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Fall in hiring raises recession alarms as Reeves confronts £15bn fiscal gap

by March 17, 2025
March 17, 2025
Fall in hiring raises recession alarms as Reeves confronts £15bn fiscal gap

The UK’s slowing labour market is fuelling concerns that the economy could be drifting towards a recession, according to the Resolution Foundation.

The influential think tank reports that a 0.5 per cent drop in employment over the year to January matches levels “only seen during a recession”.

Businesses, many of which have frozen hiring or postponed recruitment drives, blame a cocktail of higher payroll taxes and a rising minimum wage. They fear that April’s rule changes, combined with soaring energy and utility bills, will squeeze margins and choke off fresh investment.

The labour market slump could blow a £15 billion hole in Chancellor Rachel Reeves’s fiscal strategy. The Resolution Foundation predicts that with fewer employees on the books, tax revenues will fall short of the government’s own targets. Reeves had previously balanced the books by a margin of £9.9 billion in the autumn but now risks breaching her spending rules by more than £4 billion.

James Smith, the Foundation’s research director, cautioned against hasty cuts to benefits that would particularly affect the poorest households. Labour backbenchers are already resisting plans to freeze or tighten eligibility for personal independence payments, which could see many people lose £675 a month. Smith argued that emergency short-term savings would cause “real harm”, urging the government not to pursue quick fixes that hamper longer-term welfare reform.

Reeves has maintained Labour’s pledge not to raise income tax, VAT or national insurance, although she could opt to extend the freeze on income tax thresholds to 2029-30—the year by which she must meet her key fiscal rule. Projections suggest this measure could raise around £10 billion.

All eyes are now on the Office for Budget Responsibility (OBR) ahead of the 26 March spring statement. Since last autumn’s budget, economic conditions have worsened and growth is expected to come in lower, at around 1 per cent rather than the previous 2 per cent forecast for 2025. Productivity growth—already weak since the pandemic—may also face further downgrades, inflating borrowing bills by tens of billions of pounds over the medium term.

Meanwhile, rising inflation, driven by energy and utility price hikes, is set to reach 3.6 per cent this year, up from the current 2.5 per cent. Capital Economics estimates higher inflation will add £1.2 billion to Reeves’s borrowing requirement by the end of the decade, and government bond yields—an indicator of public borrowing costs—have climbed, potentially adding £7 billion more in debt interest.

The chancellor has only days left to navigate these mounting pressures. With recession clouds gathering, sluggish hiring, and swelling costs, the spring statement promises to be a critical test of Reeves’s fiscal mettle.

Read more:
Fall in hiring raises recession alarms as Reeves confronts £15bn fiscal gap

0
FacebookTwitterGoogle +Pinterest
previous post
Young staff bear the brunt of wage and tax hikes, latest data reveals
next post
Ominous dip: UK manufacturers fear deepening downturn in 2025

You may also like

Over a thousand civil servants threaten strike action...

March 16, 2024

How AI-Powered Meeting Minutes Are Changing the Corporate...

July 25, 2024

Britons have more confidence in EU than Westminster,...

March 31, 2023

UK tech sector retains third in the world...

December 21, 2022

Email Marketing: The Unseen Catalyst for Business Growth...

November 15, 2024

July could be ‘lull before the storm’ for...

August 9, 2022

HMRC Reports VAT Gap Increases to £8.6 Billion...

March 8, 2024

Asos, Boohoo and George promise to be ‘clear...

March 27, 2024

UK power prices hit record high amid cold...

December 12, 2022

UK house prices fall at fastest pace since...

September 7, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Trump orders Attorney General to investigate Biden’s autopen use amid cognitive decline concerns

      June 5, 2025
    • Elon Musk warpath against Trump’s ‘big, beautiful bill’ rattles House GOP

      June 4, 2025
    • Durbin obstruction threat chills Senate as Trump nominees hang in balance

      June 4, 2025
    • Elon Musk posts ‘Kill Bill’ meme in latest push to nix Trump’s ‘big, beautiful bill’

      June 4, 2025
    • Why ADX Can Mislead You — And How to Avoid It

      June 4, 2025
    • S&P 500 on the Verge of 6,000: What’s at Stake?

      June 4, 2025

    Categories

    • Business (8,143)
    • Investing (2,006)
    • Politics (15,519)
    • Stocks (3,127)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved