UK employer confidence rises slightly, but hiring outlook weakens
UK employer confidence rises slightly, but hiring outlook weakens

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UK employers’ confidence in the economy edged up heading into 2025, according to the latest JobsOutlook by the Recruitment and Employment Confederation, despite lingering concerns over hiring demand.
At the same time, employers’ confidence in making investment and hiring decisions fell by three points this quarter (from net: -2 to net: -5) – in contrast to the near-term peak of net: +16 in the three months to June 2024.
The survey of 634 UK employers found that perception of the UK economy’s performance, while still weak, improved by three points to (net: -25) when compared to the three months to October (net: -28).
This continues a recovering trend that started in early 2023. The surveyed employers’ perception on how the UK economy was performing, was markedly better in December (net: -12), compared to just after the shock of the Autumn Budget in November (net: -39).
Separately today, Chancellor Rachel Reeves announced new plans to deliver the Oxford-Cambridge Growth Corridor, which will link both cities, that will boost the UK economy by up to £78 billion by 2035.
The REC also noted that the fall in employers’ confidence in making investment and hiring decisions was driven by heightened post-Budget concerns in November – when the barometer dropped to net: -17 - after which it returned to positive territory (net: +2) in December.
“There can be no doubt that the budget created headwinds for companies all over the country. But these data show that the economy is bigger than government policy, with employers’ confidence holding steady as we head into 2025,” Neil Carberry, REC Chief Executive, said in a press release.
Medium size companies (50-249) were markedly more positive about intentions to hire permanent and temporary staff, than smaller and larger employers.
Organisations in London and the Midlands were significantly more positive about short-term hiring and short-term temporary hiring. Those in the Midlands are significantly the most positive about medium-term permanent hiring.
Private sector demand for temps in the medium-term was far stronger in the private sector than for the public sector.
Around 14% of surveyed employers highlighted plans to reduce their permanent headcount in the next three months, up from 5% in the three months to October, driven by sharp rises in intent in November and December after the Budget.
A fall in medium-term permanent hiring intentions was driven by a marked deterioration in sentiment in both November and December, when the proportions planning to reduce headcount rose to 15% and 18%, respectively, from just 4% in October.
Short-term permanent hiring intentions weakened but continued to predict growth in workforces. to net: +5. This is seven points lower than the equivalent figure for the three months to October. The barometer of medium-term permanent hiring intention similarly fell across the quarter - by eight points (to net: +4) compared to the three months to October.
The balance of sentiment towards short-term use of temporary and/or contract workers turned marginally negative this quarter, falling seven points from net: +5 in the three months to October to net: -2 in the three months to December. While falling by four points this quarter, compared to the three months to October, the balance of sentiment towards planned medium-term use of temporary and/or contract workers remained marginally positive, at net: +1.
“The Autumn Budget’s rise in National Insurance has clearly had an impact on hiring intentions, with firms affected by the reduction in the threshold particularly hard hit. The increase in employers planning to reduce headcount is a concern, but still small at this stage,” Carberry said.
“A balanced view of today’s report shows there is opportunity out there for businesses and candidates alike, but more to do to grasp it. Making sure that the industrial strategy tackles long-term challenges like infrastructure, skills, and taxation with more of a can-do attitude will be vital.”