Jobs warning for Reeves ahead of Budget
Employers need a shot of confidence from the Chancellor in tomorrow’s Autumn Budget, according to the latest Recruitment and Employment Confederation (REC) JobsOutlook.
Recent surveys have shown that employers remain strikingly confident in their own businesses, even as their faith in the wider economy faltered. But that confidence in their intention to hire and invest in their own business has started to strain, according to today’s survey of 701 employers.
Some of this is because of the speculation about tax rises in the Budget and the inevitability of major changes to workplace law in the Employment Rights Bill. The Budget arriving so late in a tough and complicated year for business is not helping.
In today’s JobsOutlook, employers’ confidence in making investment and hiring decisions slipped from net: +7 in August to net: -7 in October and was net neutral across the period. But it remained two points higher than a year ago and stronger than the prolonged downturn seen in late 2024 and early 2025.
And employers’ confidence in the UK economy fell sharply between August and October 2025, down 16 points to net: -36, the lowest level since January-March 2024, and eight points below this time last year.
As a result, the Chancellor must use tomorrow’s Budget to boost confidence among employers and thereby build momentum in the job market, said Neil Carberry, REC Chief Executive.
“Businesses have taken their foot off the gas in November as the hokey-cokey of Budget speculation has grown and grown. With the threat of higher costs going hand in hand with an unamended Employment Rights Bill that will damage workers and employers alike, it is time to back businesses, not punish them.
“Good intentions will not create jobs or investment – action to back firms will. Tomorrow, the Chancellor must restore trust among businesses in the wider economy after the scare to businesses from her Halloween Budget last year.”
A Budget for business and greater pragmatism on the Employment Rights Bill will repair some of the damage to business confidence from last year’s Budget, Carberry said.
“The government promised a system to ensure that workers working regular fixed hours can have a contract that reflects that. But the guaranteed hours system in the Employment Rights Bill does not do this – it creates a bureaucratic mess, and there is little evidence that it is what workers want. The likely result is higher costs for businesses and lower job openings for workers.
“The current approach is lose-lose for business and workers, when government should be going for win-win. If left unamended, it will cost jobs and reduce competitiveness as firms avoid taking a risk on growth because workers will be given a right to a job that the business cannot justify.”
Jeopardising the temporary jobs market is particularly mistaken, given that the data shows that temporary hiring is growing while permanent hiring remains more stagnant, said Carberry .
“Temporary jobs lost will not be replaced – and the losers will be workers who need opportunities,” he said.
A drop in confidence
The survey shows employer confidence in permanent hiring fell across the UK, with larger firms and the South remaining the most optimistic, while smaller businesses and northern regions lagged behind.
Short-term permanent hiring sentiment dropped five points to net: +13, with optimism highest in August (net: +22) before softening in September (net: +8) and levelling off in October (net: +9). Confidence was strongest in the South of England (net: +22) and London (net: +16). Larger and mid-sized employers remained far more confident than small firms.
Medium-term permanent hiring expectations also eased downwards by five points to net: +16, mirroring short-term patterns. Confidence was highest in the South (net: +25) and London (net: +19), with stronger sentiment among larger and mid-sized firms.
Forecast temporary and contract hiring stayed steady, with confidence falling in London and larger firms but rising in the South and among smaller firms.
In the temporary and contract market, short-term demand in August-October remained broadly stable, dipping slightly in September (net: +4) before recovering to net: +17 in October. Confidence remained higher in the South. Larger firms saw a drop in confidence while smaller firms improved slightly.
Medium-term temporary hiring sentiment slipped three points from the previous quarter. Confidence fell in London (from net: +28 to +11) but stayed strong in the South. Larger firms remained most optimistic.
