The recruitment plans of UK companies have sunk to their lowest for more than two years amid low confidence in the economy, a survey from an accountancy firm has revealed.
The BDO Employment Index shows hiring intentions hit a 28-month low of 90.7 in September, suggesting more employers are pessimistic rather than optimistic about the prospects for growth.
The index tracks the hiring intentions of some of the UK's biggest firms over the next two quarters.
If this negative sentiment feeds through into the official UK unemployment numbers it could put paid to one of the few bright spots of the economy – that despite the recession job numbers have been going up.
Overall, business confidence improved a touch in September, by 3.4 points to 92.5, but this is still below the 95 figure which indicates that confidence is positive.
Peter Hemington, a partner at BDO, called for action to prop up the labour market: "The Government would be wise to study measures being taken in Germany and Austria where a policy of temporary shorter working times for full-time jobs, with reduced wages subsidised by the Government, has helped to reduce unemployment."
Meanwhile, a survey from EEF, the manufacturers' organisation, shows that nearly 80 per cent of companies want to see new measures to strengthen growth in the economy. In contrast, just over a quarter still see reducing the structural deficit as a top priority.
Terry Scuoler, chief executive of EEF, said: "Manufacturers have always supported the need to reduce the deficit and get the public finances back in order. However, this was conditional on government also committing to delivering on the plan for growth … government has yet to demonstrate to business that it has the same clarity and laser-like focus on growth across departments that it has on reducing the deficit."