Job losses will accelerate over the next four years, according to the data

Discount rates have reached their highest level in nearly four years since Chancellor Rachel Reeves’ Autumn Budget, new data suggests.

The S&P Global Flash Composite Purchasing Managers’ Index shows that companies are cutting jobs this month at the fastest pace since the Covid-19 shutdowns in January 2021.

Barring the pandemic, UK employment has fallen at the steepest rate since the 2008/09 global financial crisis.

S&P Global criticized the downgrade to a ‘gloomy outlook’ after the Tax hikes have been announced in the recent Budget and a ‘broader focus on government policy’ in the coming months.

Chief Executive Rachel Reeves announced on 30 October that employers will pay a 15 per cent National Insurance rate on employee wages above £5,000 from April, not to the current rate of 13.8 per cent on payments over £9,100.

At the same time, the National Living Wage will rise by 6.7 per cent to £12.21 an hour, while the minimum hourly wage for 18 to 20-year-olds will jump by 16.3 per cent to £10.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said many companies are responding to these policies with a ‘market pullback’ in pricing, especially in the rental sector. and financial services.

S&P said service providers have experienced a ‘very strong’ decline in recruitment, mainly because they are not replacing people who have simply quit.

Other firms have reduced work hours or embarked on long-term plans to restructure their workforce.

Williamson added that the proposed new laws are behind employers’ reluctance to hire more workers.

Labour’s Employment Rights Bill will strengthen protections for workers but could cost companies £5billion a year, according to the government’s own analysis.

Among the measures proposed by the bill are a ban on zero-hours contracts, a right to sick leave, and a default right to flexible working from day one.

S&P Global also reported that manufacturing output fell in December for the second straight month and the fastest pace for 11 months, at 45.7 compared to 48.3 in November. Numbers below 50 indicate a reduction.

It said goods manufacturers were hit by consumer cancellations and weak demand from Europe, which led to the fastest decline in export sales for 14 months.

In addition, manufacturers reported a significant increase in sales prices from the beginning of 2023, with anecdotal evidence suggesting transportation costs and material costs.

Williamson said: ‘There will be three more gloomy business reports by the end of 2024, with economic growth slowing, jobs falling and inflation rising.

‘Economic growth has lost momentum from the robust growth seen at the start of the year, as businesses and households have reacted negatively to the announcements and policies of the new Labor Government.’

However, the fall in goods profits was offset by the services sector favoring an increase in employment, which helped to maintain the Flash UK PMI Composite Output Index at 50.5.

The S&P Global figures came three days after the Office for National Statistics said the UK economy contracted in October for a second month in a row.