Rising Costs Force UK Businesses to Scale Back Recruitment

UK businesses are planning fewer hires than at any point in recent years, with only 57% of private-sector employers expecting to recruit in the next three months. This marks a sharp drop from 65% last autumn and is among the lowest levels recorded since the global financial crisis.

The slowdown comes as companies grapple with rising employment costs, including a £25 billion increase in national insurance contributions and higher wage pressures linked to the cost of living crisis. Many employers say these financial strains are forcing them to slow or freeze recruitment, even in sectors where demand remains high.

Industries that rely heavily on younger workers — such as hospitality, social care, and retail — are feeling the impact most. Recruitment agencies warn that fewer opportunities will hit graduates, school leavers, and those seeking apprenticeships particularly hard.

Business groups are calling on the government to provide targeted relief to struggling sectors, warning that without intervention, the hiring slowdown could hinder economic recovery. “We’re seeing companies hold back on recruitment not because they don’t need the people, but because the cost burden has become too great,” said one industry leader.

Economists caution that unless business confidence improves, the weaker labour market could persist well into 2026, potentially reducing consumer spending and slowing skills development across the economy.