Businesses Express Optimism Regarding Future Prospects, According to REC, Indicating Confidence Levels Haven't Been This High in More Than Two Years
UK Employer Confidence Shows Gradual Improvement
After a prolonged period of weakness, employer confidence in the UK economy is showing signs of improvement, according to the Recruitment and Employment Confederation (REC). The latest REC JobsOutlook report reveals a 15 percentage point increase in employer confidence, marking the first increase in two years [1].
The report indicates a positive shift in hiring and investment intentions, with employer confidence rising to a net -20 for April to June 2025 [1]. This optimistic outlook is particularly noticeable in London, where the jobs market is experiencing strong performance [1]. Hiring intentions have increased across all forms of labor supply, with a surge in confidence among large businesses about forecast permanent hiring and temporary hiring [1].
The improving demand signs seen in the recent REC/KPMG Report on Jobs and the REC/Lightcast Labour Market Tracker jobs data support this positive sentiment [2]. Encouragingly, breakthroughs in international trade, stable inflation, and a year of political stability are helping to boost employer sentiment [1].
However, this optimism is tempered by ongoing concerns about taxation and regulatory challenges. The ICAEW Business Confidence Monitor for Q2 2025 found that overall business confidence continued to decline for the fourth consecutive quarter, dropping to -4.2 [4]. Within the construction sector, confidence slipped to +4.7, and concerns about the tax burden and regulatory challenges reached near-record highs [3].
The recently announced roadmap for the Employment Rights Bill is viewed positively by employers for providing some certainty. However, REC highlights the necessity of genuine, ongoing consultation with business ahead of the bill’s finalization to sustain confidence momentum [1].
Despite these challenges, the economic environment is showing signs of improvement. The balance of short-term temporary hiring intentions surged in the three months to June - up by eight points to net: +12% [1]. The short-term permanent hiring outlook (for the next three months) improved by three points, now at net +13 [1]. These improvements suggest that employers are beginning to shake off concerns related to employment costs, inflation, and policy burdens experienced earlier in the year.
The latest JobsOutlook survey suggests a tentative turnaround is possible this year, with confidence rising month by month, indicating a steady trend towards positive territory [2]. As we move forward, it will be crucial for policymakers to address the ongoing concerns about taxation and regulatory environment to sustain this momentum and strike a better balance between supporting business growth and addressing the public finances.
References:
[1] Recruitment & Employment Confederation (REC). (2025). REC JobsOutlook Q2 2025. [online] Available at: https://www.rec.uk.com/media/19379/rec-jobsoutlook-q2-2025.pdf
[2] Office for National Statistics. (2025). Consumer confidence falls slightly in June 2025. [online] Available at: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpricesurvey/june2025
[3] Construction Products Association. (2025). Construction confidence slips to +4.7 in Q2 2025. [online] Available at: https://www.constructionproducts.org.uk/media/15697/q2-2025-construction-confidence-index-report.pdf
[4] ICAEW. (2025). ICAEW Business Confidence Monitor Q2 2025. [online] Available at: https://www.icaew.com/-/media/corporate/files/technical/economics/economic-insight/icaew-business-confidence-monitor/icaew-business-confidence-monitor-q2-2025.pdf
- The improved employer confidence in the UK economy is causing a positive shift in the finance and business sectors, with hiring and investment intentions increasing.
- Despite the overall business confidence drop in the ICAEW Business Confidence Monitor, the financial outlook for certain industries, such as London's jobs market, remains optimistic due to the improving UK employer confidence.
