UK jobs market ‘facing sustained shocks’
The Labour government is facing a rallying cry to ease the cost burden on businesses to avoid derailing a recovery in the jobs market.
The latest jobs report from KPMG and the REC, the professional body for recruiters, showed hiring for permanent roles reaching a stabilising point in February with the pace of declines the slowest since March 2023. The index for permanent placements showed a reading of 49.2, edging closer to the neutral 50.0 mark and a jump from January’s 46.9.
Jon Holt, group chief executive at KPMG, said: “The jobs market was showing its strongest signs of improvement in three years, with hiring at its closest point to turning positive.”
But he added stability was needed “for sustained shocks”.
Those who did cite a reduction in roles pointed to low business confidence, economic uncertainty, and the burden of high staffing costs.
Neil Carberry, chief executive of REC, warned the new report was “by no means a source of unalloyed celebration” but suggested the “worst of the hiring slowdown” may have passed.
“A real turnaround requires growing confidence among businesses and consumers,” he addeed.
“There is cash in the system to spend if consumers and businesses feel better – a core goal of policy should be to tackle this by reducing the cost of doing business, which will in turn address the rising cost of living.”
Last week, Chancellor Rachel Reeves delivered her Spring Statement where she insisted Labour had the “right economic plan” as growth forecasts were cut for 2026.
It came as the Budget watchdog forecast unemployment to peak later this year, with the rate currently standing at 5.2 per cent, before falling to 4.1 per cent by the end of the parliament.
Wall Street titan JP Morgan expects the UK unemployment rate to brush past its Covid-19 pandemic peak in the coming months, reaching as high as 5.5 per cent.
Resilience is the new norm against economic shocks
Business surveys and firms alike have continuously cited Labour government policy as hammering the jobs market, most notably Reeves’ £25bn tax raid on employer’s national insurance contributions in her first Budget.
Holt added that “resilience is now the new normal” as businesses continue to battle against “unexpected economic shocks because of global events out of their control”.
Over the last month, UK businesses have battled geopolitical shocks from President Donald Trump’s renewed tariff threats through to the unfolding conflict in the Middle East that has sparked fears of an energy crisis.
Trump threatened the US’ Nato peers with a 10 per cent levy for their defence of Greenland then a month later floated a 15 per tariff on trading partners after his April levies were struck down by the Supreme Court.
British Chambers of Commerce (BCC) director general Shevaun Haviland warned businesses to prepare for the worst as the impact of US tariffs on imports from the UK over a diplomatic dispute around Greenland would be “significant”.
Business have also been upended by the war between US-Israel and Iran, which has threatened to upend energy prices after the price of gas and oil surged.
Holt said the “signs of recovery” in the job market may “stall again in the near term as chief executives take stock” amidst the geopolitcal tensions.