A survey of more than 2,000 UK employers by the Chartered Institute of Personnel and Development (CIPD) shows a significant fall in hiring confidence and a sharp increase in redundancy intentions over the last quarter.

Redundancy intentions have risen to their highest levels in the last ten years, outside of the pandemic.

As employer confidence falls, the CIPD is urging the Government to accelerate its plans around business support and skills policy so firms can confidently plan for the long-term and make the investments they need to boost productivity and growth.

The survey found that the significant fall in firms' employment intentions is linked to the impending increases to employer National Insurance contributions (NICs) and the National Minimum Wage, announced in the Budget in October 2024.

Among businesses that expect their employment costs to increase:

• Almost a third (32%) plan to reduce their headcount through redundancies or recruiting fewer workers.
• Two in five (42%) plan to raise prices in response to the increased employment costs.
• A quarter (24%) report they are cancelling or scaling down plans for investing in or expanding their business.

Employer concerns are also reflected in the survey's net employment balance - which measures the difference between employers expecting an increase in staff levels and those expecting a decrease in the next three months. It fell significantly overall, from +21 last quarter to +13 this quarter, and from +24 to +16 in the private sector.

Peter Cheese, chief executive at the CIPD, the professional body for HR and people development, said: "These are the most significant downward changes in employer sentiment we've seen in the last ten years, outside of the pandemic. Employer confidence has been impacted by planned changes to employment costs, and employment indicators are heading in the wrong direction.

"Businesses have had time to digest these impending changes, with many now planning to reduce headcount, raise prices and cut investment in workforce training.

"If the Government's plans are to succeed, it's vital they set out how they will help businesses to support growth and investment. And it's important this support is felt across the economy. Our data shows it's the everyday economy sectors, such as retail and hospitality, which employ large numbers of people, that will be particularly affected by impending increases to employment costs."