New KPMG and REC data reveal London’s permanent recruitment has plunged to its lowest point this year, driven by increased employer National Insurance contributions and broader economic concerns, as businesses delay hiring and focus on cost-cutting strategies including AI investment.
Businesses in London and across the UK are grappling with a pronounced slowdown in hiring activity, a trend experts attribute largely to recent tax policy changes and broader economic uncertainty. New data from KPMG and the Recruitment and Employment Confederation (REC) shows that permanent recruitment in London has hit its lowest point since the start of the year, with the city’s jobs market notably weaker than the UK-wide average. The survey highlights that permanent placements in London fell sharply, reflecting a contraction in demand for staff following April’s increase in employer National Insurance contributions, introduced by Chancellor Rachel Reeves. Temporary vacancies and billings also declined, with London’s temporary billings remaining below the expansion threshold for 17 consecutive months.
This cautious hiring environment is compounded by firms’ concerns over the volatility of the immediate economic outlook and rising employment costs. Neil Carberry, Chief Executive of REC, stressed the delicate balance businesses face: while long-term hiring intentions remain relatively strong, there is immediate hesitation as companies adjust to increased tax burdens and uncertain global conditions. Similarly, Muniya Barua, Deputy Chief Executive at BusinessLDN, urged government reassurance that businesses would not face further unexpected tax rises and called for accelerated infrastructure projects to stimulate growth and alleviate London’s housing crisis.
The impact of the October 2024 Budget, which substantially raised employer National Insurance contributions by 1.25 percentage points and lowered the threshold at which these payments apply, has been particularly significant. A poll conducted by Boston Consulting Group suggests that over half of UK business leaders plan to prioritise investment in artificial intelligence over hiring new staff as a cost-containment strategy amidst higher payroll expenses. Labour government proposals for expanded workers’ rights are expected to push employment costs even higher, prompting many executives to plan for reduced hiring through 2025.
This tightening in recruitment has been felt across sectors, with reduced vacancies observed in technology, hospitality, and healthcare according to REC’s comprehensive surveys. The number of new job placements has declined sharply, marking the most challenging market conditions since the height of the COVID-19 pandemic in mid-2020. Although overall job losses among existing employees have not surged substantially, the availability of staff for hire has increased, hinting at a potentially softer job market ahead. However, starting pay growth for new permanent roles has shown some resilience, particularly for specialised roles in fast-growing sectors, which may indicate a selective demand for high-skill talent amidst widespread hiring freezes.
Business groups have voiced growing concerns about these developments. The British Chambers of Commerce reported that nearly one-third of small and medium-sized enterprises have either cut jobs or are contemplating reductions in response to the higher social security costs. The overall business confidence has dropped to levels not seen since 2022. The Bank of England has linked the downturn in hiring sentiment to increased labour costs and wage pressures, although it has recently cut interest rates to help stimulate growth. These rate cuts, along with forthcoming government investment plans, are viewed as potential supports to help the economy rebound in the near term.
Some commentators highlight the risk that ongoing tax hikes and policy uncertainty could further dampen hiring and investment decisions, potentially slowing economic growth. While Chancellor Reeves has indicated no intent for additional large-scale tax increases, economists caution that further fiscal measures might be necessary later in the year to meet budgetary targets. Meanwhile, the public and business frustration over the economic direction under the current government reflects wider anxieties about job security and living costs.
In summary, the UK labour market is navigating a period of acute uncertainty. Employer caution, driven by increased National Insurance contributions and concerns over future tax and regulatory costs, is curtailing hiring activity and chilling wage growth for new recruits. Although pockets of strong demand for specialised skills exist, overall conditions point to a cautious, cost-conscious approach by businesses amid a challenging economic backdrop. How government policy and monetary interventions will balance these pressures remains a crucial determinant for the UK’s labour market trajectory in 2025.
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Source: Noah Wire Services
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The narrative presents recent data from KPMG and the Recruitment and Employment Confederation (REC) regarding a slowdown in hiring activity in London, attributed to tax policy changes and economic uncertainty. The earliest known publication date of similar content is June 25, 2025, when Reuters reported that nearly one-third of small and medium-sized UK employers have made staff redundant or are considering job cuts due to increased social security costs. ([reuters.com](https://www.reuters.com/business/world-at-work/uk-employers-group-says-tax-hike-has-hit-hiring-hard-2025-06-25/?utm_source=openai)) The narrative includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged. The report is based on a press release, which typically warrants a high freshness score. However, if earlier versions show different figures, dates, or quotes, these discrepancies should be flagged. Additionally, if the article includes updated data but recycles older material, this should be noted. If anything similar has appeared more than 7 days earlier, this should be highlighted explicitly.
Quotes check
Score:
7
Notes:
The narrative includes quotes from Neil Carberry, Chief Executive of REC, and Muniya Barua, Deputy Chief Executive at BusinessLDN. A search for the earliest known usage of these quotes reveals that similar statements were made in previous reports, indicating potential reuse of content. If identical quotes appear in earlier material, this should be flagged as potentially reused content. If quote wording varies, note the differences. If no online matches are found, raise the score but flag as potentially original or exclusive content.
Source reliability
Score:
6
Notes:
The narrative originates from the Express, a UK-based tabloid newspaper. While it is a well-known publication, its reputation for accuracy and reliability is often questioned. This raises concerns about the reliability of the information presented. If the narrative originates from an obscure, unverifiable, or single-outlet narrative, flag the uncertainty. If a person, organisation, or company mentioned in the report cannot be verified online (e.g., no public presence, records, or legitimate website), flag as potentially fabricated.
Plausability check
Score:
7
Notes:
The narrative makes claims about a slowdown in hiring activity in London due to tax policy changes and economic uncertainty. These claims are plausible and align with recent reports from reputable sources. However, the lack of supporting detail from other reputable outlets and the reliance on a single source for these claims reduce the score and flag the narrative as potentially synthetic. If the report lacks specific factual anchors (e.g., names, institutions, dates), reduce the score and flag as potentially synthetic. If language or tone feels inconsistent with the region or topic—e.g., strange phrasing, wrong spelling variant—flag as suspicious. If the structure includes excessive or off-topic detail unrelated to the claim, note this as a possible distraction tactic. If the tone is unusually dramatic, vague, or doesn’t resemble typical corporate or official language, flag for further scrutiny.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The narrative presents claims about a slowdown in hiring activity in London due to tax policy changes and economic uncertainty. While these claims are plausible and align with recent reports from reputable sources, the reliance on a single, potentially unreliable source, the recycling of older material, and the lack of supporting detail from other reputable outlets raise significant concerns about the credibility and originality of the content. The use of quotes that appear to be reused from earlier material further diminishes the narrative’s reliability. Therefore, the overall assessment is a ‘FAIL’ with medium confidence.
