#uk-labour-market

#uk-labour-market

New data from Indeed suggests the UK labour market will enter 2026 in a subdued state, with job postings 19 percent below their pre-pandemic level. This is an 8 percent year-on-year decline, though broadly unchanged since mid-April and up 4 percent over the past month. The analysis - covering job postings from 1 January to 21 November 2025 - also highlights the UK as an outlier, with postings in Europe and North America remaining above pre-pandemic levels.

The resulting confusion froze investment and hiring plans. Several business surveys have shown sharp recruitment pullbacks since her first budget in October 2024, when she introduced a £25bn payroll tax as part of £40bn in wider hikes. In contrast, last week's budget focused mainly on raising taxes on consumers, including extending the freeze on income-tax thresholds - a move that will ultimately push one in four workers into the 40% bracket.

Britain is increasingly becoming an "unattractive" environment for businesses seeking to hire permanent staff, according to a stark warning from recruitment giant Hays. The firm attributes this shift to mounting wage pressures and recent tax hikes, which are compelling companies to explore automation and offshoring strategies. Hays, one of Europe's largest recruitment agencies, has previously voiced concerns regarding weaknesses across the global jobs market. However, it highlighted specific challenges within the UK that are diminishing its competitiveness as a place to work.

On one level this data shows a stable labour market performing as expected - albeit not particularly strongly. Unemployment is holding steady and in line with expectations, while wages continue to rise faster than inflation. However, underneath that there are some worrying signs. Vacancies have fallen by 10,000 in the quarter to August, a 38th consecutive fall, and is less than half the number of people currently claiming unemployment benefits.

Britain has recorded the steepest decline in hiring intentions of any major European economy, as employers struggle with the fallout from last autumn's £26bn payroll tax raid and brace for another squeeze in the Chancellor's November Budget. Data from recruiter ManpowerGroup UK shows the UK labour market is slowing at a pace unmatched elsewhere in Europe. The margin has since collapsed to just 11 points, marking a 17-point fall over the past year.

Graduate roles in the UK are at a record low, down 12% as a share of all jobs compared to last year, reflecting ongoing labour market challenges.