The latest Recruitment and Employment Confederation (REC) JobsOutlook survey of UK employers suggests he new-look government can lift the labour market by giving employers greater confidence in the UK’s growth prospects.
Today’s data shows employers are yet to shake off their caution about the economic outlook in a year marked by political uncertainty at home and the unpredictable conflict in the Gulf. The data points to a widening gap between business confidence and recruitment intentions, suggesting there is scope for stronger jobs growth if the government can inspire more confidence in the economic outlook.
The JobsOutlook shows a dip in surveyed employers’ confidence in the economy as well as their confidence to hire and invest, over the last quarter – pointing to caution and uncertainty among many firms in the face of economic and political headwinds. Yet in an encouraging sign for jobseekers, these same employers’ intentions to hire permanent and temporary staff in their own organisations remain higher than in the first quarter of the year. This suggests employers still need staff despite feeling less optimistic about the wider economic environment.
“Employers continue to tell us they want to hire, and recruitment intentions are gradually improving,” says Maxine Bligh, REC Chief Membership & Innovation Officer. “We also see signs in the data that employers are considering converting their recent reliance on temporary workers into permanent hires. But many businesses remain cautious. The gains are clearly there for the taking if the new PM follows through on his early signals that he wants to reduce business burdens as well as the costs to hiring. The focus on tax relief is welcome but overall, it is small fry to firms when you consider the extent of costs already absorbed and coming down the line as a result of the Employment Rights Act.
“The government has loaded too much onto employers at once, making it harder for the job market to get off the ground,” she added. “Ministers must rethink elements of their employment rights reforms, especially the unworkable guaranteed-hours proposals for agency workers. If the government wants to unlock stronger job creation, it must keep the labour market flexible and support businesses’ capacity to hire and grow.”
Employers’ perceptions of how the UK economy was performing dropped by four percentage points this quarter (April-June 2026), totalling net: -47 per cent, when compared to last quarter (February-April 2026). The sentiment dropped to -56 per cent in April but bounced back in May (-43 per cent).
Similarly, confidence in hiring and investment also decreased by two percentage points to net: -14 per cent this quarter (April-June 2026) when compared to the previous quarter (February-April 2026). The decline in sentiment occurred primarily in April at net: -24 per cent but improved to net: -9 per cent in May.
