Business confidence among employers reaches a two-year high, indicates the Recruitment and Employment Confederation (REC)
Improving Employer Confidence Signals Potential Job Growth
A recent survey by the Recruitment and Employment Confederation (REC) has revealed a significant improvement in employer confidence in the UK economy, marking a turnaround that hasn't been seen in two years. The JobsOutlook survey for the three months to June 2025 indicates that employers' confidence in making investment and hiring decisions has risen by 15 percentage points since the previous quarter, now sitting at net -20[1].
This improved sentiment has led to heightened hiring intentions across all types of roles, with particularly strong activity in London. The survey results also support the improving demand signs in the REC/Lightcast Labour Market Tracker jobs data[2]. Encouragingly, breakthroughs in international trade, stable inflation, and a year of political stability are helping to boost this optimism.
However, the wider labor market data reveal persistent uncertainty and mixed employer behavior. The July 2025 KPMG & REC UK Report on Jobs highlighted ongoing volatility and some caution among employers, with a faster decline in permanent job placements in June and reduced recruitment activity[3]. Employers remain cautious, partly due to recent rises in employment costs such as National Insurance Contributions and fears of further tax increases, leading to hesitancy in hiring despite a larger supply of candidates.
Despite these challenges, there has been a surge in confidence among large businesses (those with more than 250 staff) about forecast permanent hiring and temporary hiring. The balance of short-term temporary hiring intentions surged, now at net: +12%. The short-term permanent hiring outlook (for the next three months) improved by three points, now at net +13[1].
The medium-term permanent outlook sentiment (next four to 12 months) improved by six points to net: +15%. Additionally, there was an eight-point rise in medium-term temporary/contract hiring intent[1]. The JobsOutlook report suggests continued improvement in hiring intentions across all forms of labour supply[2].
The recently announced roadmap for the Employment Rights Bill is another positive step in offering some certainty. London is showing strong performance in the jobs market, with the change in employers' confidence in making investment and hiring decisions up 12 percentage points, now at net +3 for the three months to June 2025. London showed the strongest confidence in any region, in both forecast permanent hiring and temporary hiring[1].
While the latest JobsOutlook survey signals improving employer confidence and stronger hiring intentions for April to June 2025, wider labor market data reveal persistent uncertainty and mixed employer behavior, with cautious hiring amidst ongoing economic and policy challenges[1][2][3]. The upcoming Budget must strike a better balance between supporting business growth and addressing the public finances to further encourage this positive trend.
[1] REC (2025). JobsOutlook survey for the three months to June 2025. Recruitment & Employment Confederation. [2] REC (2025). REC/Lightcast Labour Market Tracker jobs data. Recruitment & Employment Confederation. [3] KPMG (2025). KPMG & REC UK Report on Jobs. KPMG. [4] Office for National Statistics (2025). Employment Index. Office for National Statistics.
The improvement in employer confidence could potentially lead to increased investment and hiring decisions, particularly in the finance sector due to the surge in confidence among large businesses [1]. This positive trend in business confidence is further supported by the strong performance of London's jobs market [1].
Encouraged by breakthroughs in international trade, stable inflation, and a year of political stability, the financial arena might witness substantial job growth, thus impacting the overall economy [1].
){kind=link}