Today’s Budget announcement comes at a pivotal time for the UK’s labour market and must prioritise job creation and competitiveness, says the Recruitment and Employment Confederation.

The latest REC/KPMG Report on Jobs published this month showed a drop in permanent staff appointments for the first time since May 2003, although demand for staff remained strong in many key sectors and temporary postings were up. This mixed picture confirms that the UK labour market is in a delicate position.

Commenting ahead of Alistair Darling’s (pictured) first Budget announcement, the REC’s director of external relations, Tom Hadley said:

"This is no time to be imposing further tax increases affecting business and measures to stimulate growth and encourage entrepreneurship are needed at this crucial junction. Recruiters still report ongoing staff shortages in many key sectors which is why the industry will also be closely monitoring measures to enhance skills and boost the pool of employable candidates. One other key focus area will be the impact of public spending cuts on recruitment in specific sectors such as social care."

Meanwhile, Martin Hesketh, managing director at accountancy, tax advice and support services provider Brookson, added: "Controversy over capital gains tax and anger about income shifting proposals both highlighted in the pre-Budget report has led to comment that the government’s relationship with smaller firms is worse than ever.

"However, since then we’ve had the announcement of the introduction of an entrepreneurs’ 10% capital gains tax relief and Mr Darling promised to introduce measures in ‘future budgets’ that would boost enterprise – so we shall see!

"I also expect there to be even further announcements about HMRC powers, penalties and compliance checks, and all the evidence points to a significant increase in tax visits over the next 12 months."