UK hiring has slumped to a new decade low and is expected to worsen amid shrinking job vacancies, a new report says.
Accounting and business advisory firm BDO said it has recorded UK employment at its weakest since August 2013 in its latest employment index report.
The index dropped for a sixth consecutive month to a reading of 99.12 points.
It said there were small upticks in optimism from business owners over December as the service sector experienced strong hiring demand.
However, BDO predicts that UK GDP (gross domestic product) growth will remain stagnant in the coming months due to the ongoing effects of higher borrowing costs and inflation.
Business confidence shows modest growth, constrained by the cost-of-living crisis, reduced spending, and international conflict.
BDO predicts a further decline in UK employment due to “uncertainty” surrounding interest rates and weak business demand.
The unemployment rate is expected to reach a high of 4.6% over the second and third quarter of 2024 due to continued concerns over the labour market, according to the report.
The Office for National Statistics (ONS) recorded an unemployment rate of 4.2% over the three months to October in its most recent official data.
A partner at BDO, Kaley Crosswaite, said: “It’s encouraging to see our resilient services sector spearheading a small upturn in Optimism and Output during December, as the festive season offered a welcome respite for businesses.”
UK businesses are entering 2024 on a “brighter” note a more positive note than in 2023, BDO says.
“As companies gear up for 2024, it is critical that businesses see renewed support from the Government to enhance their productivity, increase their recruitment and bolster their skills. Only with this support can we continue to revive the economy,” Ms Crosswaite said.