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UK businesses freeze hiring plans amid recession fears

UK businesses London, UK. 03rd Jan, 2023. London commuters make their way to the office across London Bridge on their first day back to work in 2023, avoiding train strikes which are causing widespread disruption across the country and millions of people have been advised to avoid rail travel. 03rd January, 2023, City of London, England, UK Credit: Jeff Gilbert/Alamy Live News
UK businesses are putting hiring plans on hold due to the uncertainty around a recession. Photo: Jeff Gilbert/Alamy Live News

UK businesses are hesitant to take on new staff in the UK given fears that the country could eventually tip into recession, according to a survey.

The Recruitment and Employment Confederation/KPMG monthly permanent placements index fell to 46.3 last month, down from 46.8 in January with employers more likely to use temporary workers to fill roles.

Permanent job placements fell for the fifth month in a row in February and pay growth slowed.

The survey noted that recruitment activity remained “dampened by lingering economic uncertainty and subsequent hesitancy around hiring”.

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Clare Warnes, partner for skills and productivity at KPMG UK, said the economic outlook was impacting hiring activity.

"Employers keep playing the short game by focusing on temporary hires," Warnes said.

REC said increases in starting salaries for permanent and temporary workers were the second-weakest in nearly two years.

However, Office for National Statistics figures still show that, despite soaring pay growth, inflation is still eroding real incomes at one of the fastest paces on record.

Kate Shoesmith, REC deputy chief executive, said: ““As hirers work out what variable economic forecasts might mean for their business and staff, it makes sense that we continue to see temp billings hold up so well. Temporary staffing ensures firms can continue to provide goods and services, and people can grow their careers – even when the economic outlook is unclear.”

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Three of the four monitored English regions recorded lower permanent placements, led by London. The North of England bucked the overall trend and saw a modest upturn.

The North of England saw the steepest increase in temp billings during February. The only monitored English area to report a fall was the Midlands.

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