There was more evidence of Labour's jobs squeeze today with numbers of employees and vacancies dropping.

Official figures showed the labour market 'cooling' as firms warn Rachel Reeves against mounting another tax raid at the Budget.

Unemployment was flat at 4.7 per cent in the three months to July - but there was a further hefty fall of 8,000 for the number of payrolled workers last month.

Vacancies were down 10,000 over the quarter to August.

Unemployment was flat at 4.7 per cent in the three months to July - but there was a further hefty fall of 8,000 for the number of payrolled workers last month

Vacancies were down 10,000 over the quarter to August

Official figures showed the labour market 'cooling' as firms warn Rachel Reeves against mounting another tax raid at the Budget

However, the public sector has continued to add numbers. Central government staffing was estimated at 4.04million in June, up 95,000 since Labour came to power.

Some 2.07million of that was down to the NHS, spiking by 42,000 over the year.

Wage growth has fallen back to its lowest level for more than three years as firms continue to clamp down on hiring following the national insurance and minimum wage hikes.

The Office for National Statistics (ONS) said regular wage growth, excluding bonuses, was 4.8 per cent in the three months to July, compared to 5 per cent in the previous three months - and the lowest since May 2022.

Wages are still outstripping CPI inflation by 1.2 per cent but that is the slowest pace since September 2023.

ONS director of economic statistics Liz McKeown said: 'The labour market continues to cool with the number of people on payroll falling again, while firms also told us there were fewer jobs in the latest period.'

She added: 'The number of vacancies also fell on the quarter, though the rate of decline appears to be slowing.'

Labour's jobs squeeze continues after Reeves tax raid