The UK job market is experiencing the most severe contraction among the world’s main economies (G7), in a phenomenon that experts describe as a “strategic freeze”. According to the most recent data from the ManpowerGroup Employment Outlook Survey (for the last quarter of this year), British employer confidence fell by 17 percentage points year-on-year — the biggest global decline recorded by the index this year.
The main cause cited for this scenario is the direct impact of the Labor government’s new State Budget. The central measure, the increase in employer contributions to National Insurance (the equivalent of our Social Security) represents an additional burden of 25 billion pounds (around 28.66 billion euros).
According to KPMG and the Recruitment & Employment Confederation (REC), in their December 2025 report, the permanent placement index stood at 45.5 points (values below 50 indicate contraction). Companies, faced with this sudden increase in fixed personnel costs, chose to suspend expansion plans to prioritize internal retention.
Anemic growth and international comparison
This blockage in labor mobility occurs in a context of macroeconomic fragility. Data from the Office for National Statistics (ONS, the equivalent of our INE) confirm that British GDP grew by just 0.1% in the third quarter of 2025, having even registered a monthly drop of -0.1% in October. In comparison, over the same period, the Eurozone grew by 0.3% and France by 0.5%, underlining the UK’s isolation in the tail of G7 growth.
The International Monetary Fund (IMF) revised its forecasts, pointing to annual growth of just 1.3% for 2025, a figure considered insufficient to boost the capital market and attract the necessary foreign investment.
The country now faces a structural dilemma: 76% of employers report difficulties in finding specific skills, particularly in the technology and energy transition sectors. Although global demand has fallen, starting salaries for high-skilled roles continue to rise slightly as companies try to attract specialized talent from competitors rather than create new positions.
Recruitment sector analysts indicate that although the market may have reached its lowest point, recovery will depend on signs of greater fiscal stability and direct productivity incentives next year.