Vacancies for permanent jobs in the UK fell at their fastest rate in four years last month, according to a new survey. This decline adds to the growing concerns about the country’s economic outlook.
The monthly jobs report, conducted by consultancy KPMG and recruitment firm REC, shows that many businesses are hesitant to hire amid uncertain markets and weak economic data. The survey revealed that vacancies for permanent roles dropped at the quickest pace since August 2020, when the UK was deep in the Covid pandemic. Temporary job vacancies also saw a decline in December.
The UK labor market has been slowing for much of 2024, and December marked the 14th consecutive month of declining overall job vacancies. Among permanent positions, the biggest drops were seen in the executive/professional and IT/computing sectors.
Some employers, particularly in hospitality and retail, are concerned that the government’s planned £25bn increase in national insurance contributions (NICs) — set to take effect in April — will further dampen hiring.
Jon Holt, KPMG’s group chief executive, said: “As we start the new year, it’s a muted one for the UK jobs market. The hiring market may remain cautious in the short term, as businesses pause to assess higher employment costs, slower interest rate cuts, and rising inflation.”
However, Holt noted that the situation could improve in the months ahead. Despite the slowdown in hiring, the survey found that wage inflation continues to rise, reaching its highest level since August 2024. This suggests there is still demand for workers.
“As 2025 progresses and UK economic growth picks up, businesses will need new talent. Salary inflation being at its steepest in four months shows they are still willing to compete for it,” Holt added.
Policymakers are closely monitoring how the increase in employers’ NICs, a key measure in the October budget, will impact hiring and inflation in the coming months. The Bank of England has warned that government policies have created “additional uncertainties” for the economic outlook.
Meanwhile, a recent bond sell-off in financial markets has raised concerns about the UK’s public finances. The yield on 10-year government bonds recently surpassed 4.8%, the highest level since the global financial crisis in 2008.
The Office for Budget Responsibility (OBR) is preparing a new economic forecast, set to be released on March 26. The chancellor will need to respond to the OBR’s projections and may be forced to cut spending if the report indicates she is likely to break her fiscal rules.
The latest inflation data will be published next week, which could further shape the UK’s economic future.
