UK Jobs Market Weakens Amid Reeves' £26bn Tax Increase

The UK jobs market has weakened notably following Chancellor Rachel Reeves' £26 billion tax increase, with payroll numbers dropping and vacancies falling, signaling a loosening labour market. Despite this, recent data suggests the decline in employment may be easing, with fewer job losses than expected in July. Starting salaries rose at the slowest pace in over four years amid increased competition for fewer positions, and demand for permanent staff has contracted significantly. The unemployment rate held steady at 4.7%, the highest since 2017, and is expected to peak near 5% later this year, raising concerns about reduced tax revenues and increased welfare spending. Economists warn these conditions could compel the government to consider further tax hikes to balance public finances as inflation continues to erode real wage growth. The combination of these factors poses a complex challenge for Chancellor Reeves in managing the upcoming Autumn Budget while supporting economic stability.