UK Budget 2024: Key Insights and Implications for the Recruitment Market
In light of the Autumn Budget announcement yesterday, Cedar will be monitoring how these policy changes will shape workforce strategies for our clients and candidates. Here, we outline the Budget’s key takeaways and share our insights on how these shifts could influence recruitment trends, talent needs, and industry strategies for adapting.
Budget Highlights at a Glance
- Employer National Insurance Contributions: NICs will surge from 13.8% to 15% starting April 2025, along with a reduced threshold. This hike significantly raises employment costs, particularly for businesses with large workforces.
- Sector-Specific Incentives: Immediate relief on business rates is on the horizon for retail, leisure, and hospitality, with permanent reductions commencing in 2026. However, increased duties on luxury goods may dampen hiring in specific niches.
- Investment in Growth Sectors: A hefty investment in green energy, life sciences, and aerospace is set to bolster the UK’s high-growth sectors, creating strong demand for specialised procurement and technical talent aligned with new government initiatives.
- Tax Reforms and Compliance: The Budget tightens regulations on umbrella companies and adjusts Capital Gains Tax, notably impacting high-income individuals and business owners. Expect a surge in demand for tax advisory roles as firms navigate these new compliance challenges.
How Will This Budget Impact Recruitment?
- Increased Hiring Costs and Potential Headcount Freezes
The rise in NICs will compel many companies to reevaluate their workforce budgets. Businesses in people-heavy sectors, especially those with large low-wage workforces, may slow hiring or pause recruitment altogether. However, in-demand skill sets and essential roles are likely to remain priorities.
- Tax Advisory and Compliance Talent Demand
With regulatory changes around NICs and umbrella companies, the demand for tax advisors and compliance specialists will spike. Firms focused on contracting and international talent must ensure they meet updated standards to mitigate risks and avoid liabilities.
- Sector-Specific Opportunities in Public Sector and Procurement
The Budget’s focus on housing and green investments creates clear opportunities for our Public Sector and Procurement teams. The government’s commitment to building 1.5 million new homes and refurbishing schools will drive demand for finance and project management roles.
- Impact on Retail, Leisure, and Hospitality Recruitment
The relief on business rates is likely to benefit these sectors. Yet, the simultaneous rise in the National Living Wage could prompt some businesses to shift focus toward automation or essential hiring only. This could drive recruitment towards operational efficiency and strategic hires.
- Change and Transformation Opportunities
The rise in employer NICs and the National Living Wage will drive companies to streamline operations and focus on cost optimisation to manage increased employment expenses effectively. Additionally, substantial backing for renewable energy projects presents new growth opportunities, positioning businesses in this sector for expansion. From 2026-27, permanent reductions in business rates for key sectors, including retail, leisure, and hospitality, could further encourage investment and foster project exploration across these industries.
- Potential for Contractor Hiring Demand Increase
The rise in Employer National Insurance Contributions to 15% will increase the cost of hiring interims, making experienced interims—who deliver immediate impact—a more attractive option. Low-margin, heavily staffed businesses are set to feel these changes acutely, likely driving demand for interim specialists in cost-cutting, restructuring, and automation projects.
New regulatory focus on umbrella companies and off-payroll working may bring clarity to the interim market, helping businesses distinguish legitimate off-payroll roles from conventional flexible staffing. Rising costs of PAYE hires may also prompt organisations to structure projects as ‘outside IR35’ for tax efficiencies.
Key Skills and Roles on the Rise
- Tax and Compliance Advisors
With increased scrutiny on tax compliance, demand for specialists managing corporate tax structures will escalate.
- Public Sector Finance and Project Management
Government spending commitments in housing and education will necessitate recruitment for finance and project management roles.
- Sustainable Procurement and Supply Chain Roles
Growing support for green initiatives will drive demand for procurement professionals skilled in sustainable sourcing and eco-friendly practices.
- Finance and Operations in Retail, Leisure, and Hospitality
As businesses look to balance growth and increased costs, demand for finance roles focusing on operational efficiency is expected to rise.
Concluding Thoughts: Adapting to the Evolving Recruitment Landscape
Cedar’s Group Managing Director, Chris Morrison had this to say in response to the autumn budget:
‘The UK Autumn Budget 2024 presents an optimistic yet intricate outlook for the job market, focusing on elevating wages and skill development while balancing costs for employers. A key highlight is the planned increase in the National Living Wage to £12.21 per hour by April 2025, which is expected to provide a significant boost for millions of workers, particularly in sectors like retail and hospitality.
However, employers will need to navigate these changes carefully. The combination of higher wages and a 1.2% rise in National Insurance Contributions adds to the financial burden, especially for smaller businesses with tighter budgets. While the doubled employment allowance offers some relief, many companies may seek creative solutions, such as exploring automation and transformation.
In the realm of private equity, the budget’s implications are significant. Proposed adjustments to Capital Gains Tax could affect private equity firms’ exit strategies and profit margins. An increase in CGT may lead firms to expedite exits before potential tax hikes take effect, creating a rush in the short term. However, long-term effects could include a more cautious investment approach, as firms reassess the attractiveness of the UK as an investment destination.
Overall, the Autumn Budget aims for a future of growth while challenging employers and private equity firms to adapt to an evolving fiscal landscape. It offers a forward-looking plan that hopefully provides reassurance to all participants in the job market and investment community.’
How Cedar Can Support Your Business Through Budget Changes
If you’re considering how the recent budget changes will affect your recruitment needs or career direction, Cedar is here to support you. Get in touch with Georgina Denslow: 0203 002 8043 to discuss how we can help.
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