Recessionary fears cause turning point for UK labour market
The UK labour market is set to see an end to its 10-month streak in positive hiring intentions, a report from accountancy and business advisory firm BDO has found.
The report claims that the turning point follows a dip in productivity and growing recessionary fears from businesses.
Terry Jones, Partner and Head of Yorkshire and the North East at BDO LLP, said: “We’re already seeing the impact of a challenging environment, with many businesses forced to make cuts and – in some cases - consider whether the business will continue to be viable.
“Soaring energy costs and inflationary pressures are headwinds we can expect to become more severe in the coming months, exacerbating the economic and political uncertainty both firms and consumers feel this winter.”
BDO’s Employment Index has seen an increase each month since October 2021, increasing 0.53 points to 115.33.
The report finds that the labour market now sits at a turning point, however, with recessionary fears expected to put downward pressure on employment.
Official data has started to reflect this, with hiring intentions falling for the first time since August 2020.
The unemployment rate is predicted to rise to 4.1% by the end of this year before peaking at 4.6% in Q2 2023.
These figures are, however, much lower than those recorded in the period immediately after the global financial crash, when unemployment figures sat at 7.9%.
BDO’s Inflation Index also soared to an all-time high of 119.05 in August, its highest reading since the first Business Trends survey was first published in 1992.