Business confidence rose at the start of the year

Latest figures show that business confidence showed recovery during the first quarter of the year.

This is despite facing rising costs and other economic uncertainties; however, the next collection of data might not be as positive due to the current Gulf conflict.

Hiring intentions on the up

The latest Recruitment and Employment Confederation’s JobsOutlook survey shows that employer perceptions of how the UK economy was performing improved by 11 percentage points between December 2025 and February 2026 to a net: -30%.

And, while the report notes that this is still historically weak, the trend was driven by a significant bounce-back in February to net: -16% for the month.

Employer confidence in making investment and hiring decisions has also risen, with firms’ belief in themselves increasing in the month of February (+9) for the first time in months.

Hiring intentions for short-term and medium-term permanent and temporary roles remain in positive territory, with a notable pick-up in February 2026.

Gulf crisis likely to slow growth plans

Commenting on the findings and what to expect over the next few months, REC Chief Executive Neil Carberry said, “All economic data at the moment will be affected by the crisis in the Gulf, but these figures show that there was a change in momentum for business across the UK in the first part of the year.

“With the cost shocks of the 2024 Budget having worked through the system, and the promise of stability, firms began to thaw out long-frozen growth plans. The shock to the global economy from the Gulf crisis is likely to slow this process in March, but initial feedback from REC members suggests any actions by hirers represent delay to plans rather than their cancellation, so there is a good chance of restored momentum if the crisis passes in the next one or two months.

A longer crisis, with attendant higher costs of capital for business, higher input costs and supply chain disruption, would be a lot more challenging.

“The question now is what the UK government can do to keep momentum in the labour market. This crisis has exposed the weak position the UK is in on the sheer cost of doing business. Greater pragmatism and partnership working on the government’s labour market agenda, along with action to support business on skills and energy, should be a priority. In particular, addressing the design of government proposals for flexible contracts, which prove their worth in uncertain times, is vital.”

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