As 2025 drew to a close, the UK employment landscape reflected persistent caution among businesses, driven by economic uncertainty and escalating costs. According to the latest KPMG and Recruitment & Employment Confederation (REC) UK Report on Jobs, compiled by S&P Global, permanent staff appointments declined at the sharpest rate in four months, marking a 39-month downturn. The update from KPMG UK also mentioned that temporary billings also fell for the second consecutive month, though at a milder pace.
As noted the research report, this data, collected between December 4-17, underscores a broader weakening in demand for staff, with permanent vacancies dropping more sharply than temporary ones.
The report highlights a marked reduction in overall job vacancies during the fourth quarter’s end, with the decline accelerating slightly from November.
Permanent roles saw steeper falls across most sectors, particularly in Secretarial/Clerical and IT & Computing, where demand plummeted. Engineering experienced the softest drop among permanent categories.
For temporary positions, vacancies decreased in nine out of ten monitored sectors, with Executive/Professional roles hit hardest, while Nursing/Medical/Care remained stable after a slight uptick the previous month.
Candidate availability, however, surged substantially, fueled by widespread redundancies.
Permanent worker supply grew at its fastest rate in four months, while temporary candidate numbers expanded at the slowest pace since April.
This imbalance between rising supply and falling demand contributed to tentative improvements in pay trends.
Starting salaries for permanent staff rose to a seven-month high, though still below long-term averages, and temporary wages increased marginally for the first time in three months.
Regionally, the picture was uneven.
Permanent placements fell across most English regions, except the Midlands, which saw a slight increase—the first since May.
Temporary billings grew sharply in the Midlands but declined steeply in London, the North, and South of England, highlighting localized resilience amid national challenges.
Jon Holt, Group Chief Executive and UK Senior Partner at KPMG, attributed the slowdown to prolonged cost pressures and global economic volatility.
“Many firms continue to pause hiring and are flexing where they can by using temporary staff,” Holt noted.
He emphasized that executives are prioritizing investments in technology for resilience and productivity but await stronger economic signals before ramping up recruitment.
REC Chief Executive Neil Carberry cautioned against overinterpreting December data but acknowledged the market’s slippage from November.
“The second half of 2025 showed some signs of a long run of negative data softening,” Carberry said, pointing to slower placement falls compared to the yearly average.
He expressed hope that this might be a seasonal dip rather than a reversal, with Midlands growth offering optimism.
Looking ahead, Carberry urged the government to foster business confidence through a clear industrial strategy and balanced implementation of the Employment Rights Act, which has raised concerns among employers.
Overall, the report paints a picture of a jobs market in restraint, with hiring likely to remain subdued in early 2026.
As businesses navigate post-Budget realities, signs of recovery could emerge if economic confidence rebuilds.
This cautious stance reflects broader UK economic headwinds, where flexibility through temporary roles may bridge the gap until sustained growth returns.