LONDON — British businesses lost steam and pulled back on hiring last month, as industry reacted to the Labour government’s bumper tax-raising budget, new data showed Monday.

Business confidence in the U.K. fell in November to its lowest level since January 2023, fresh data from business advisory and accountancy firm BDO showed.

BDO’s Optimism Index fell 5.81 points on the month to 93.49, marking the biggest month-on-month decline since August 2021.

The fall — which was recorded across both the services and manufacturing sectors — is “likely to reflect businesses’ immediate reaction to announcements in the Autumn Budget,” BDO said.

U.K. Finance Minister Rachel Reeves on Oct. 30 delivered her much anticipated Autumn budget, which included a slew of tax hikes. Chief among them was an increase to the National Insurance (NI) payroll tax paid by employers and an uptick in the National Living Wage.

Businesses reacted with consternation at the time, warning that the measures — intended to boost growth — would instead push up inflation and slow hiring.

BDO, in its report, pointed to rising costs, falling orders and continued labor market challenges as key issues currently facing businesses.

“Despite businesses pinning their hopes on the prospect of further interest rate cuts early next year, cost pressures — including higher National Insurance Contributions — may offset any positive effects, leaving a mixed future picture for businesses,” it added.

It comes as U.K. job vacancies fell in November at the fastest rate since the start of the pandemic, according to fresh monthly job market data from accountancy firm KPMG and the Recruitment and Employment Confederation (REC).

The report, also released Monday, showed demand for staff fell at a “sharp and accelerated pace” last month, marking the steepest fall in vacancies since August 2020.

“Businesses are having to weigh up the prospect of increasing employee costs following the budget, which has led to an accelerated slowdown in hiring activity across the board,” Jon Holt, group chief executive at KPMG, said.

The fall, which was especially pronounced among permanent workers, comes amid a wider slowdown in the U.K. labor market, as the economy is seen cooling following an extended period of high interest rates.

Bank of England Governor Andrew Bailey said last month that employers were correct to warn of possible job cuts as a result of Labour’s budget.

In a November report the British Retail Consortium wrote to Reeves, warning that retailers would be hit with a £2.3 billion ($2.93 billion) bill, when the National Insurance increase comes into effect next April.