UK Recruitment Market Update: Mid-2025 Trends and Outlook

As we reach the midpoint of 2025, the UK recruitment landscape continues to reflect the complex interplay of economic pressures, regulatory shifts, and evolving workforce expectations. While some green shoots of recovery are beginning to emerge, recruitment activity remains subdued across many sectors. Below, we explore the key trends shaping the market, the underlying causes, and the outlook for the remainder of the year.

Current Market Conditions

Hiring Activity Remains Muted
The UK labour market continues to experience a slowdown in hiring activity. According to recent data, job vacancies have fallen approximately 21% below pre-pandemic levels, with a further 5% decline reported from March to mid-June 2025. Graduate hiring has been particularly affected, with postings down 33% year-on-year, now at their lowest level since 2018.

Permanent vs Contract Recruitment
Permanent placements have declined for over 30 consecutive months, reflecting a persistent caution in long-term hiring decisions. Contract and temporary roles have proven somewhat more resilient, but even these have seen a 5% year-on-year decline. Nevertheless, contingent workforce models are increasingly being adopted as businesses seek greater agility.

Key Drivers Behind the Slowdown

Rising Employment Costs
April 2025 saw an increase in employer National Insurance contributions and the national living wage, which has driven up the cost of hiring. These changes are prompting many organisations to pause or reduce permanent headcount expansions.

Economic and Geopolitical Uncertainty
With GDP growth projected at just 1.2% for 2025, coupled with persistent global uncertainty, many businesses are deferring major talent investments. Recruitment strategies are being re-evaluated considering inflationary pressures and tighter budgets.

Technological Disruption
The integration of AI and automation into HR processes is also influencing hiring patterns. Organisations are increasingly using technology to streamline functions traditionally carried out by junior or entry-level employees, further impacting demand in those segments.

Talent Supply-Demand Imbalance
An increase in layoffs has led to a surplus of candidates, creating heightened competition for available roles. While this offers employers a broader talent pool, it has also led to a slowdown in the time-to-hire for many positions.

What’s Next: Market Outlook for Late 2025

Stabilisation Expected
While the market is not yet in recovery mode, signs point to a plateauing of declines, particularly in the contract space. Early indicators from Q2 show marginal month-on-month growth in job postings, suggesting hiring may be stabilising.

Flexibility Will Prevail
Organisations continue to favour temporary and contract-based hiring solutions. These provide operational flexibility while limiting long-term financial exposure—especially in a climate where budgets remain tightly controlled.

Tentative Optimism
Looking ahead, there is cautious optimism for a modest upturn in Q4 2025 and into 2026. With inflation cooling and potential interest rate reductions on the horizon, business confidence may begin to return, albeit gradually.

Implications for Employers and Recruiters
To navigate this evolving environment, recruitment strategies must remain adaptable and forward-thinking. Employers are advised to:

• Prioritise workforce flexibility by balancing permanent and contingent talent.
• Leverage technology to enhance hiring efficiency and candidate experience.
• Focus on in-demand skills and value-based hiring to future-proof talent pipelines.
• Stay agile to respond quickly as market conditions shift.

Conclusion
The UK recruitment market is currently characterised by caution, cost-consciousness, and a preference for flexibility. While challenges persist, there is an opportunity for strategic workforce planning to take centre stage. As we move through the second half of 2025, businesses that remain responsive and adaptive will be best placed to attract and retain top talent in an increasingly dynamic environment.

If you would like to discuss how to adapt your recruitment strategy in this shifting market, our consultants are here to help. Get in touch with us today.