Cooling labour market adds to Reeves’s tax-raising dilemma

Hints at plans to increase employers' national insurance contributions comes as demand for labour slows

• Pay growth falls below 5% for first time in more than two years
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Rachel Reeves has dropped a broad hint that she plans to increase employers' national insurance contributions as part of a package of measures in the budget. If the chancellor does go ahead with what is effectively a tax on jobs she will be doing so at a time when the labour market is clearly cooling.

Make no mistake, the labour market is in pretty good shape. There are a record number of people in work and the jobless rate stands at 4%. The 14 consecutive increases in interest rates between December 2021 and August last year have proved less damaging to jobs than expected.