Employers’ confidence takes a knock, but hiring intentions remain stable

A recent report indicates that, despite low employer confidence, there are still encouraging signs for hiring this year.

Autumn Budget concerns affected confidence

Confidence in the UK economy weakened due to the lead-up to the last Autumn Budget, according to the latest findings.

The REC JobsOutlook found that employers’ confidence decreased between October and December 2025.

Perceptions of economic conditions fell by five percentage points from the previous quarter to net: -41%, driven by particularly low sentiment in October.

Confidence did, however, improve a little after the Chancellor’s Autumn Budget in November and December.

Hiring intentions remain positive

The REC believes that there are still grounds for optimism for jobseekers as we move into the new year.

Hiring intentions for the next three to nine months remain positive, and while plans for both short‑term and medium‑term temporary hiring dipped slightly, this figure stayed above zero, as did expectations for permanent hiring in both timeframes.

REC: ‘Government needs a policy punch strong enough to knock lingering negativity out of the picture’

Commenting on the findings, Neil Carberry, REC Chief Executive, said, “The volume of Budget speculation for a fiscal event only a few weeks before Christmas had a clear effect on employers’ view of the economy as a whole. It is no surprise, therefore, that December was a little weaker.

“Despite this, overall hiring intentions remained positive, and the real test is whether those intentions were put into action in January. So far, anecdote from recruiters suggests that this is starting to happen, but confidence is fragile. Sentiment can shift quickly.

“Underpinning business confidence should be at the heart of the government’s labour market strategy, and that starts with much more pragmatism about the real costs of the Employment Rights Act to workers and companies.”

Nail added, “Government needs a policy punch strong enough to knock lingering negativity out of the picture. What is needed is a genuinely pro‑enterprise, pro‑investment agenda that puts muscle behind the industrial strategy, tackles high-cost pressures like energy and avoids tax rises that choke activity.

“December’s shift toward more practical unfair dismissal rules in the Employment Rights Act was a rare moment when common sense beat ideology, and businesses have something to cheer. It should set the tone for the consultation period ahead, not stand as the exception.”

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