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Job vacancies tumble as interest rates bite

job vacancies
job vacancies

Job vacancies have tumbled nearly 15pc as businesses struggle to hire in the face of high borrowing costs and while the UK battles a recession.

Vacancies in January fell below 900,000 for the first time since April 2021, according to data from the jobs search engine Adzuna, a drop of 15pc from a year earlier.

The downturn will fuel hopes of an interest rate cut sooner rather than later, after the Bank of England raised borrowing costs 14 consecutive times before leaving interest rates unchanged at 5.25pc since last August.

In high interest rate environments, businesses’ budgets are stretched as borrowing becomes more expensive. This means there is less cash to hire new employees. Economic uncertainty in times of recession also slows hiring.

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Changes in the Bank Rate take approximately a year to filter through to employers’ decisions, but the weakening jobs market suggests that the effects have started to be felt.

Andrew Hunter, of Adzuna, said: “As we predicted last month, January 2024 has proven to be one of the most difficult starts to the year for job hunters in recent years with companies continuing to put hiring plans on ice.

“This will be disappointing for those hunting for work and only serves to drive up competition nationwide for available roles.”

It comes as Britain’s businesses begin to feel the pinch over disruption in the Red Sea, which has seen container ships attacked by Houthi rebels.

More than half of manufacturers and exporters said they have been affected by the disruption, a survey of 1,000 businesses by the British Chambers of Commerce found.

William Bain, head of trade policy at the BCC, said that the full implication of the disruption was yet to be felt across the economy.

Mr Bain said: “There has been spare capacity in the shipping freight industry to respond to the difficulties, which has bought us some time.

“But our research suggests that the longer the current situation persists, the more likely it is that the cost pressures will start to build.”

The Red Sea route through the Suez Canal normally accounts for 15pc of global sea trade.

The US and the UK have been launching retaliatory strikes against the rebels since January, but Houthi representatives said that the bombing would not stop ­further attacks.