Britain’s labour market is showing signs of strain, with new data revealing a fall in job openings and growing pessimism among businesses, fuelling fears that the economy may be sliding towards recession.
Recruitment site Adzuna reported vacancies fell by 2.1 per cent year-on-year in August, driven by softer demand and higher employment costs, including the National Living Wage and employer National Insurance contributions. The downturn has been most pronounced in London, the East of England and the South West, with nurses, teachers, doctors and hospitality workers among those hardest hit. Graduates face the bleakest outlook, with entry-level roles down by more than a third since January.
The hiring slowdown comes alongside fresh warnings from the Confederation of British Industry (CBI), which said companies across the private sector expect activity to keep falling over the next three months. Alpesh Paleja, the CBI’s deputy chief economist, urged the Chancellor not to repeat last year’s approach of targeting firms with tax rises, warning that the business tax burden is already at a 25-year high.
Public sentiment is equally gloomy. A survey by UKHospitality found almost half of 5,000 respondents believe their local high street is in worse shape than a year ago.
The timing of the downturn adds pressure on Labour as it heads into its party conference this week. Chancellor Rachel Reeves faces the challenge of addressing a £30bn hole in the public finances and is expected to unveil fresh tax measures in her Budget on November 26.
Economists warn the employment data points to a downturn. Simon French, chief economist at Panmure Liberum, cited the Sahm Rule — which signals recession when unemployment rises by at least half a percentage point in a year. With UK joblessness up from 4.1 to 4.7 per cent in 12 months, French said the increase was a “clear warning signal” for policymakers.
Business leaders share the concern. AO founder John Roberts has said he believes the UK may already be heading into recession, while hedge fund manager Robert Gibbins — who made his name betting against sub-prime mortgages before the 2008 crash — told The Telegraph he is now betting against Britain. Gibbins criticised both government and opposition leaders for failing to tackle structural issues such as energy capacity and artificial intelligence investment.
Employers are also dragging their heels on filling positions, taking nearly six weeks on average to hire. Analysts warn this could worsen once the incoming Employment Rights Bill takes effect, making it easier for staff to challenge dismissals at tribunal — a move that some fear could unleash a “blizzard of litigation” for companies already struggling to manage costs.
