Companies cut jobs or slowed their hiring plans last month at the highest rate in a decade in a worrying trend ahead of April’s increase in staff costs.

Data compiled by ­accountancy and advisory firm BDO showed private sector employment dipped to its lowest since November 2012, while business confidence has fallen to a two-year low.

Researchers at the ­Recruitment and Employment ­Confederation (REC) and big four accountant KPMG found vacancies were at their weakest level since August 2020, when the economy was in the grip of Covid. Permanent staff demand has now fallen for the past 17 months.

The Chancellor’s October budget introduced a 6.7% rise in the minimum wage and a jump in the main rate of employer NICs to 15% from 13.8%. The earnings threshold that triggers the tax will fall from £9,100 to £5,000 a year.

Andrew Griffith, the Tory shadow business and trade secretary, said: “The Conservatives warned that Labour’s national insurance jobs tax and ­economic mismanagement would kill growth stone dead, putting countless jobs at risk.

“These reports are deeply concerning, but the bad news doesn’t end there. Just last week, the Bank of England halved their growth forecasts and warned that inflation and unemployment will rise. Labour are taking us back to the dark days of the 1970s.”

The Bank of England has forecast that inflation will climb from 2.5% to 3.7% in the summer, with unemployment rising to 4.8%.

Jon Holt, group chief executive and UK senior partner at KPMG, said: “It is unlikely that we will see any significant improvements in the survey data over the near term, as hiring stays muted and staff availability continues to rise.”

Kaley Crossthwaite, partner at BDO, said: “The new year is often time for a refresh, but businesses across the UK are continuing to face challenges that have weighed on them for months.”

The government insists it is providing the certainty businesses need by measures such as capping corporation tax for the duration of parliament and locking in permanent full expensing to boost investment.