Rachel Reeves hasn't got a clue about business - job stats show she's out of her depth

Unemployment hitting 5% is a frightening headline figure but one that paints an accurate picture of the UK's permanent jobs market right now. Put simply, this country is on the ropes. Those in the recruitment industry have long seen 5% unemployment coming due to this government's failure to understand the basics of economics.

The rise in employers' National Insurance, announced in last year's Budget, has had a brutal impact on business confidence and companies' desire - and ability - to hire. Why? Because the level of tax payable means the numbers no longer stack up. As a result, many SMEs have put hiring on hold or have had to lay staff off just to stay afloat.

It took a while to feed through, but we are now seeing the full force of the fiscal madness that underpinned last year's anti-business Budget.

Such a punitive tax on jobs meant jobs were always going to be lost, and at scale. And that is exactly what has materialised.

And then there's the small matter of the Budget. Ever since the date was announced, businesses have been deeply apprehensive about what could be unleashed on them on November 26.

And they have every right to be. With the country's finances in tatters, many are bracing themselves for even more taxation. And last week's peculiar pre-Budget press conference by the Chancellor suggests that even more fiscal pain is the likely outcome.

Again, the expectation of more taxation disincentivises businesses from hiring and, if margins are already tight, sees them make staff redundant pre-emptively.

On top of the existing tax regime and worries about taxes to come, many businesses also have deep concerns about the impending Employment Rights Bill, which could leave them exposed in many ways.

Now all good businesses do their best to create positive environments for their staff, but many are worried that the balance of power will soon favour full-time employees so much that they will be vulnerable.

As a result, a growing number of firms are opting to hire on a contract basis. The result? Fewer full-time jobs. All in all, unemployment hitting 5% is a serious blow to the Labour government ahead of the Budget.

Of course, any sentient government would see that further taxes on business will only exacerbate the situation and send unemployment even higher.

But this government, run by people with zero experience of running a business, is not sentient. We need radical changes to stop the rot and the first should be the removal of a Chancellor clearly out of her depth.

If not, 2026 is shaping up to be an annus horribilis for UK Plc.