Market News

Britain’s private sector companies cut jobs at the fastest pace since February, a closely watched survey showed, as Rachel Reeves’s tax raid pushed up staffing costs.

Employment in both the manufacturing and service sectors fell for the 10th consecutive month during July, the S&P Global Flash UK PMI showed.

Bosses complained that increased payroll costs had forced them into redundancies and hiring freezes.

In April, companies faced an increased in employer National Insurance contributions and the national minimum wage, which were announced in the Chancellor’s Budget last year.

The FTSE 100 rose 1pc to a new record high and the value of the pound fell amid expectations that the jobs slowdown would encourage the Bank of England to cut interest rates next month.

“The flash UK PMI survey for July shows the economy struggling to expand as we move into the second half of the year,” said Chris Williamson, chief business economist at S&P Global.

“The sluggish output growth reported in July reflected headwinds of deteriorating order books, subdued business confidence and rising costs, all of which were widely linked to the ongoing impact of the policy changes announced in last autumn’s Budget and the broader destabilising effect of geopolitical uncertainty.

“Particularly worrying is the sustained impact of the Budget measures on employment. Higher staffing costs have exacerbated firms’ existing concerns over payroll numbers in the current environment of weak demand, resulting in another month of sharply reduced headcounts in July.

“The weak growth trajectory and sustained culling of jobs will add to pressure on the Bank of England to cut rates again at its next policy meeting in August.”