Business confidence among employers is at its highest point in over two years, according to the Recruitment and Employment Confederation (REC)
UK Employer Confidence and Hiring Intentions on the Rise
After a turbulent year marked by low economic growth, tax increases, high supply chain and energy costs, unexpected tariffs, and additional uncertainty about staffing due to the upcoming Employment Rights Bill, the latest JobsOutlook survey and REC/KPMG Report on Jobs indicate a significant improvement and cautious optimism in the state of employer confidence and hiring intentions in the UK economy.
Employers’ overall economic confidence has risen by 15 percentage points to net -20 in the three months to June 2025, marking the highest level in over two years but still negative overall. More importantly, confidence in making investment and hiring decisions has shifted into positive territory at net +3, up from net -9 in the previous quarter.
This positive shift in confidence is reflected in increased hiring intentions across all types of labour supply, including both permanent and temporary roles. London, in particular, is showing strong hiring activity and often acts as a leading indicator for broader market trends. The data suggests that the spring 2025 downturn was a temporary dip amid an ongoing steady two-year trend toward improving confidence.
The short-term permanent hiring outlook improved by three points across the quarter to net +13. The balance of short-term temporary hiring intentions surged in the three months to June, up by eight points to net +12%. Similarly, there was an eight-point rise in medium-term temporary/contract hiring intent experienced across the quarter.
REC Chief Executive Neil Carberry stated that businesses are beginning to shake off concerns on investment and hiring that they have carried for almost three years. He also emphasized that the recently announced roadmap for the Employment Rights Bill is another positive step in terms of offering some certainty, but genuine, ongoing consultation with business ahead of the Bill's Royal Assent and plans for the Budget is essential to sustain momentum. Encouragingly, breakthroughs in international trade, stable inflation, and a year of political stability are helping, as stated by REC Chief Executive Neil Carberry.
However, challenges remain, including rising tax and employment costs, economic growth remaining stubbornly low, and uncertainty related to upcoming legislation like the Employment Rights Bill. Despite these factors, optimism is growing that businesses will step up recruiting and investment in the second half of 2025, especially if government actions unblock investment plans and support business growth.
In summary, employers’ overall economic confidence stands at net -20, with confidence in hiring and investment decisions turning positive at net +3. Hiring intentions are increasing across all types of roles and labor supply, with London leading hiring activity. Key drivers include recovery from the spring dip, improved business sentiment, hope for government support, and stable inflation/trade conditions. Ongoing risks include tax and employment costs, legislation uncertainty (Employment Rights Bill), and low economic growth. This positive trend in confidence and hiring intention is cautiously optimistic and dependent on how government policy evolves to support business growth and investment.
- Given the positive shift in employer confidence, there is an expectation that businesses may increase their investments in the finance sector to support their hiring decisions.
- As hiring intentions across all types of labor supply increase, the business sector, which is closely tied to finance, may see a surge in financial requirements to manage the influx of new employees.
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