Recruitment body urges Spending Review to focus on hiring and investing

Many UK businesses remain concerned about government support following the recent Spring Statement.

While the government has pledged stability and growth, employers continue to feel anxious about rising employment taxes, increased minimum wage rates and reduced flexibility under the proposed Employment Rights Bill.

A recent REC and Whitestone Insight survey revealed much of employers’ forecasts for the rest of 2025 were worse after the Chancellor’s Spring Statement 2025.

Businesses are hopeful that next month’s Spending Review and the Autumn Budget will provide incentives to support hiring and investment.

Commenting on the findings, REC Deputy Chief Executive Kate Shoesmith said, “We are seeing early green shoots in the economy, with some modest improvements in business sentiment, but our survey suggests many firms may still hold back until there is clearer and sustained action on economic policy.

“This Spending Review is a chance to hit reset and drive a bold, joined-up strategy for long-term economic growth – one that enables employers and work seekers to tap the full potential of today’s labour market. A critical test of the Spending Review and the Autumn Budget are whether they will lead to more optimistic forecast hiring and investing from employers, and greater belief that we are on a long-term path to growth.”

Kate added, “Government must support and enhance businesses in the UK by offering clarity on the industrial strategy and the role of the labour market to underpin growth across all sectors. More certainty on where government investment will focus and how businesses can work in partnership with government to support people into work will help.

“Right now, investment to drive growth by industry has been curtailed by increases in Employer National Insurance Contributions. Government certainly cannot take the resilience of the labour market for granted with more costs to doing business and instead need to provide stimulus to invest.

“A quarter of respondents in our survey report that skills shortages and lack of qualified candidates are and will likely continue to sit among their biggest challenges this year, reflecting the warning in our 2022 Overcoming Shortages report. The report said that a labour market restricted by skills and labour shortages could cost the UK economy up to £39 billion every year.”

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