Britain’s jobs market has lost momentum ahead of Chancellor John Healey’s forthcoming Budget, with employers reducing hiring and vacancies continuing to fall, according to new figures from the Recruitment and Employment Confederation and KPMG.

The survey points to a weakening labour market at a politically sensitive moment for the government. Permanent placements fell in October after three consecutive months of growth, while temporary hiring also declined for the first time since March.

Employers adopt a more cautious stance

Recruiters reported that businesses were becoming more reluctant to commit to new staff as they awaited greater clarity on tax, spending and employment policy. Demand for workers remained subdued, with vacancies falling across much of the economy.

The figures suggest that the fragile recovery in recruitment has stalled. Businesses have faced a combination of weak demand, elevated borrowing costs and uncertainty over the economic outlook, making workforce expansion harder to justify.

The slowdown will add to pressure on the government to use the Budget to support business confidence while addressing the public finances. Any measures affecting employers’ labour costs could have a direct bearing on recruitment decisions over the coming months.

Implications for the Bank of England

The employment data will also be watched closely by the Bank of England. A softer labour market could reduce wage pressure and eventually support the case for lower interest rates, although persistent inflation remains a constraint on monetary policy.

The Bank recently raised Bank Rate to 4%, citing renewed inflation risks and forecasting that consumer-price inflation could reach about 5% by the middle of 2027. A deterioration in hiring would complicate that outlook by pointing to weaker growth even as price pressures remain elevated.

Budget uncertainty weighs on decision-making

Recruitment agencies said uncertainty before the Budget was contributing to a wait-and-see approach among employers. Companies are increasingly assessing whether to delay expansion, rely on temporary staff or leave vacancies unfilled.

For households, weaker hiring could limit income growth and reinforce concerns about job security. For policymakers, the challenge is to prevent a slowdown in employment from becoming a broader decline in business investment and consumer spending.

The REC-KPMG figures therefore provide an early warning that Britain’s labour-market recovery is losing traction just as the government prepares to set its economic priorities. The Budget’s treatment of business taxation, public spending and employment policy is likely to be central to restoring confidence.