UK business confidence drops to its lowest point in nearly two years following the Labour budget.

• The U.K.'s business confidence fell to its lowest level since January 2023 in November, according to fresh data from BDO, a business advisory and accountancy firm.
• Since the start of the pandemic, the fastest rate of decline in U.K. job vacancies occurred last month, according to KPMG.
• Businesses have warned that Labour's "pro-growth" budget could lead to inflation and reduced hiring.

The Labour government's bumper tax-raising budget caused British businesses to lose steam and pull back on hiring last month, according to new data shown on Monday.

In November, the U.K.'s business confidence reached its lowest point since January 2023, according to fresh data from BDO, a business advisory and accountancy firm.

The BDO Optimism Index decreased by 5.81 points in a month, reaching its lowest point since August 2021.

The fall recorded in both services and manufacturing sectors is likely to be a result of businesses' immediate response to the Autumn Budget announcements, according to BDO.

On October 30th, U.K. Finance Minister Rachel Reeves unveiled her highly anticipated Autumn budget, which featured a range of tax increases. The most significant of these changes was an increase to the National Insurance (NI) payroll tax paid by employers, as well as an increase in the National Living Wage.

At the time, businesses expressed concern that the measures aimed at promoting growth would instead lead to higher inflation and reduced hiring.

Businesses are facing challenges such as rising costs, falling orders, and a persistent labor market, according to BDO's report.

Although businesses are optimistic about the possibility of lower interest rates in early next year, the increase in National Insurance Contributions may counteract any benefits, resulting in an uncertain outlook for businesses.

The number of job openings in the U.K. decreased at the fastest pace since the pandemic began, as indicated by new monthly data from KPMG and the REC.

Last month, the report revealed that demand for staff dropped at a rapid pace, resulting in the sharpest decline in vacancies since August 2020.

KPMG's Jon Holt stated that businesses must consider the possibility of raising employee expenses due to the budget, which has resulted in a quickened slowdown in hiring across all sectors.

The pronounced fall among permanent workers in the U.K. labor market is due to the wider slowdown in the economy, which is seen as cooling following an extended period of high interest rates.

Last month, Andrew Bailey, Governor of the Bank of England, stated that employers were right to express concerns about potential job losses due to Labour's budget.

The British Retail Consortium wrote to Reeves in a November report, stating that retailers would face a £2.3 billion ($2.93 billion) bill due to the National Insurance increase, which takes effect next April.