We are no economists (!) but, as I think we all know, last year was a subdued one overall.  The UK’s economy grew by just 0.1% in the final quarter of 2025, a repeat of the slow pace of the previous quarter. Overall, this was slightly better than 2024, but generally weaker than expected.  Not quite the economic thriller one might have hoped for!

So, we have been looking at what this news seems to be built on and suggests in terms of recruitment.

Economic growth and the job marketLabour market may soften further: Some forecasts expect unemployment to edge higher as firms adjust to slower sales and investment.

Sector differences will shape job outcomes:  Services stagnation is important because retail, hospitality, etc., employsome of  the largest share of the workforce. Flat growth here is key in employment trends.

Market confidence:  Low confidence tends to delay or dampen hiring, investment and expansion plans.Interest rates and inflation:  To stimulate a low-growth economy, the Bank of England may lower interest rates later in the year but currently holding steady on 3.75%.

The bottom line for the job market

Job openings: Slow economic growth typically limits willingness to hire. Employers expand less aggressively and stay cautious when output stagnates, meaning fewer job openings and more selective employers.

Wage growth: Even where there is expansion or job availability, we might experience gentler wage growth, as competition for talent cools.

Sector variants: Some sectors will buck the trend – it’s not all doom and gloom.

Confidence is key:  If the Bank of England lowers interest rates to encourage spending, this will support hiring, but if demand stays weak, lower rates alone may not be enough.

The good news:  Whilst this is not music to anyone’s ears, and despite the sluggish headlines, Joyce Guiness has actually seen activity pick up in early 2026.  We’re getting new roles in regularly and staying pleasantly busy, in particular the last few weeks, which have been electric – suggesting there’s life in the market yet.

As always, we’re here to help you navigate whatever comes next.