The United Kingdom’s labour market continued to cool in November as employers held back hiring decisions ahead of Finance Minister Rachel Reeves’ budget announcement on 26 November, according to a new industry survey released on Monday.
The report, carried out by the Recruitment and Employment Confederation (REC) in partnership with KPMG, showed that permanent job placements declined again, although the rate of decrease was the slowest seen since July 2024. Despite that, the improvement from October was minimal. Temporary hiring also weakened and slipped below the neutral 50.0 mark, signalling contraction.
Lisa Fernihough, Head of Advisory at KPMG, said many employers paused recruitment activities while they assessed the potential impact of the new budget.
“A complicated business environment and uncertainty around the budget kept hiring frozen last month as leaders waited to see what the financial changes could mean,” she said.
“There is some reassurance now that large-scale tax rises were avoided, but this alone may not be enough to shift hiring confidence quickly.”
Other recent business surveys have shown similar caution in recruitment before the budget announcement. Reeves’ spending plan includes around £26 billion in tax increases, though most of those rises will not directly fall on employers.
A Bank of England survey conducted before the budget also suggested that many companies expect to reduce staff levels in the near term.
Meanwhile, official data released last month showed the UK unemployment rate rose to 5.0% in the third quarter. Some analysts believe this increase may be partly linked to earlier tax changes introduced in April. Wage growth also slowed slightly during the same period.
While overall demand for workers softened, November saw the smallest decline in job vacancies in five months. The availability of candidates increased at the second-fastest rate since late 2020. Starting salaries for permanent hires rose at the quickest pace in five months as employers competed for applicants with key skills.
The findings are based on responses from around 400 recruitment and employment firms across the UK, gathered between 12 and 24 November.