
JCB Backtracks on Permanent Contracts, Citing Challenging Market Conditions
British manufacturing giant JCB has reversed its plans to convert 500 agency staff to permanent positions, citing "challenging market conditions" following Chancellor Rachel Reeves's recent tax-raising Budget. This decision comes as businesses across the country grapple with rising costs and faltering confidence after employer National Insurance (NI) contributions were raised from 13.8% to 15%.
While JCB intends to offer permanent contracts to some agency employees, these plans have been delayed by at least six months until trading conditions improve. This U-turn has sparked anger among union leaders, with GMB, representing many affected workers, claiming JCB is reneging on the agreement behind the pay settlement. They emphasize that permanent contracts for the lowest-paid workers are a top priority.
JCB is not alone in scaling back staffing. The construction equipment specialist had already shed 230 agency workers before the Budget, fearing a slump in factory orders. New data from S&P Global reinforces this pessimism, with December's purchasing managers' index (PMI) for manufacturing falling to 47, its weakest reading in 11 months. According to Rob Dobson, director at S&P Global, the Chancellor's Budget has dampened confidence and raised costs, further stifling hiring plans.
The Chancellor's £25 billion tax raid appears to be impacting other industries as well. Genting Casino has lowered its annual pay offer for staff from 3% to 2%, while Castlewood Hotels has postponed refurbishments, cut staff hours, and halved planned pay rises. Owner Daniel Sangiuseppe views the policy as "anti-growth."
As the Chancellor defends her Budget measures, sentiment among manufacturers and service providers remains fragile. December's data suggests UK businesses face a period of caution, leading to reduced recruitment, scaled-back investments, and concerns about an impending "industrial recession.