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Stuart Gentle Publisher at Onrec

Employers’ confidence is up – but new government must help them shift to hiring mode

Firms are feeling more confident about their business and the economy, according to the Recruitment and Employment Confederation’s (REC) latest JobsOutlook.

In the latest representative survey of almost 500 employers across the country, the picture was at its most positive since early 2022.

Businesses reported that confidence in making hiring and investment decisions for their own firm surged by 12pts to a balance of +16 in the three months to June, while their outlook on the wider economy also improved, though it remains in negative territory (up 7pts to –29).

Despite this further evidence of growing confidence, there is a way to go to get growth flowing. There is some evidence of the short-term pauses that recruiters have reported during the General Election campaign, with all classes of hiring intentions neutral-to-positive, but at marginally weaker rates than previously.

We have now moved beyond the political climate of the past quarter, and with inflation lower and firms anticipating a pattern of lower interest rates, there is room for a more positive trend. Much now depends on how employers react to the new government’s policies on employment and welfare-to-work, especially how seriously and promptly they act on the pre-election and King’s Speech commitment of a partnership approach with business.

Neil Carberry, REC Chief Executive, said:

“There is enough evidence in this data to suggest that firms’ confidence in themselves is returning more robustly, and that they can see light at the end of the tunnel for the wider economy. A lot of the wider picture rests on the expectation of a lower interest rate environment from the late summer, of course.

“This is all vital to the growth mission that the government has set itself – rightly putting the economy at the heart of its plan. Businesses will be looking to take the brakes off when they can, and there is a big role for an industrial strategy in sustaining confidence with long-term stability. From tax to transport, skills, trade and regulation – clarity and stability matter to building up employers’ willingness to grow.

“Getting it right will mean higher employment and lower inactivity. But this can only happen where we get our approach to jobs right – encouraging employers to take a chance on people and catering to the flexibility workers need. The government has a mandate for change. But the details of that plan will matter in workplaces across the country and will decide its success or failure. These details may seem like small stuff to Whitehall think-tanks and trade union HQs, but they will decide the record of this government. Establishing a partnership with business quickly on the design of these steps is not optional – it is critical to their success.”