People & Culture

Employer confidence rises but remains fragile ahead of Budget: REC

ByWilliam Furney

PublishedSep 29, 2026

Employer confidence rises but remains fragile ahead of Budget: REC — Source: William Furney

News Brief

Hiring intentions remain muted despite an improvement in business sentiment, with employers calling for action on employment costs in the Budget.

UK employers have become less pessimistic about the economy and their own prospects for hiring and investment, although confidence remains negative ahead of the Budget, according to the Recruitment and Employment Confederation (REC).

The trade body for the UK recruitment industry recorded an eight percentage point improvement in employers’ confidence in the wider economy between June and August, taking its net measure to -39 percent.

Confidence in making hiring and investment decisions also rose, increasing by six percentage points to net -8 percent. However, the REC cautioned that the improvement had yet to develop into a broader recovery in business sentiment. Its latest JobsOutlook survey, carried out with polling company Whitestone Insights, questioned 704 UK employers between 15 June and 18 August.

Recruitment plans show little improvement

The more positive view of the economy was not accompanied by stronger hiring intentions. Employers’ short-term outlook for permanent recruitment slipped by one percentage point from the previous quarter to net +8 percent. Over the medium term, sentiment fell four points to +6 percent.

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Plans for temporary recruitment were also muted. The short-term measure declined by one point to +2 percent, while the medium-term figure remained at +5 percent, unchanged over the previous three quarters.

Maxine Bligh, interim chief executive of the REC, described the latest results as encouraging but warned against reading too much into the improvement.

“Businesses are feeling better than they were three months ago, but let’s not mistake improvement for recovery,” she said.

“Sentiment on both scores remains in net negative territory, which shows confidence is improving but not yet at the levels needed to deliver the growth businesses and the Chancellor want.”

There were stronger recruitment expectations in some parts of the country. The North of England recorded a net +11 percent outlook for permanent hiring in the short term, compared with +10 percent in the Midlands.

For medium-term permanent recruitment, the Midlands was the most positive region at +12 percent. It also recorded the strongest medium-term outlook for temporary recruitment, at +11 percent. Medium-sized businesses were the most optimistic about recruiting both permanent and temporary employees.

Employment costs in focus before Budget

The REC is using the survey to press for measures to lower the cost of employing people when the Chancellor delivers the Budget. It wants a phased restoration of the National Insurance threshold and greater investment in childcare, healthcare and transport infrastructure. The organisation has also called for further reform of the Growth and Skills Levy to enable employers to fund shorter and more targeted training programmes.

Bligh argued that improving labour market conditions would be important to the government’s wider growth ambitions.

“A strong labour market is fundamental to delivering sustainable growth and the Chancellor has the chance to create better conditions for growth in his first Budget,” she said.

“Businesses have said loudly and consistently that employers need action to reduce non-wage costs. A phased restoration of the National Insurance threshold would make a real difference to employers.”

The recruitment body is separately urging ministers to exempt agencies from proposed guaranteed-hours requirements.

Bligh said restricting the use of temporary agency workers could have consequences for young people seeking to enter employment, including those not in education, employment or training.

“Reducing the ability of firms to use temporary agency workers kills off a crucial route into work for thousands of young people not in education, employment or training,” she said.

The REC wants further engagement between government and businesses before ministers issue their final response to the consultation on the proposals.

William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers and broader workplace trends.