Economic recovery at risk due to strong headwinds - Jobs Forecast
In a surprising turn of events, hiring intentions in London and the UK have shown a significant improvement over the past few months, despite the ongoing economic and political headwinds. According to recent reports, the medium-term hiring intention in London has bounced back from net: -2 to net: +19, quarter-on-quarter, and the balance of sentiment towards short-term use of temporary and contract workers has been restored to positivity, with a net: +3.
This improvement is primarily driven by several key factors. Employers are adopting a selective and flexible approach to hiring, focusing on sectors and regions where activity persists, even though overall hiring intentions are weak in many areas. The adoption of AI and Large Language Models (LLMs) is causing some companies to pause or slow hiring for roles with high AI exposure, but this also means some firms are still hiring to fill gaps or adjust to new workloads short-term while assessing longer-term shifts.
Economic uncertainty, reinforced by geopolitical tensions, higher interest rates, tax hikes, and cost pressures, has caused firms to be cautious. However, demand for flexible staffing solutions and temporary hires supports some sustained hiring intentions, despite the backdrop of slower overall recruitment growth.
Another factor contributing to this improvement is the expansion in candidate supply, which encourages some employers to fill vacancies, even as they anticipate slower growth overall. Temporary roles may be used to manage uncertainties around permanent headcount.
Policy and industrial strategy navigation also play a significant role. While employers express concerns about increased tax burdens and overheads, there is hope that government strategies focused on competitive energy prices and easing talent access may support hiring in the medium term if fiscal clarity improves.
Across the UK, there has been a notable improvement in the permanent hiring outlook among mid-sized enterprises. The short-term permanent hiring outlook has improved by three points to net: +9, and the hiring intentions for medium-term recruitment of temps have experienced a five-point rise, with a net: +8 in April 2025.
The optimism in London on permanent hiring for the next three months has notably restored, moving from net: +3 to net: +18, quarter-on-quarter. On medium-term temporary hiring in London, there has been a significant improvement, from net: -5 to net: +10.
However, there is anxiety about the workability of proposals in the government's Employment Rights Bill. Employers' perceptions on how the UK economy is performing were 12 points lower in the three months February-April 2025, at a net: -35. Employers' confidence in making investment and hiring decisions has also fallen by 5 points to net: -9 in the same period.
Despite these challenges, the resilience of the jobs market in London and the UK continues to shine through, with employers adapting and finding ways to navigate the complex environment and maintain hiring activity.
- The resurgence in hiring intentions, both short-term and medium-term, in London and across the UK, is largely due to the focus on specific sectors and regions where activity persists, combined with the demand for flexible staffing solutions and temporary hires. (business, finance)
- The gradual expansion in candidate supply and the strategic navigation of policy and industrial issues also contribute to the sustained hiring intentions, as some firms adjust to new workloads short-term while assessing longer-term shifts in finance and business operations. (business, finance)
