UK Jobs Market Crisis: S&P Global Reveals Sharp Rise In Redundancies And Hiring Slump

The UK labour market is facing its 39th consecutive month of decline, with unemployment rates increasing, employment levels reducing, and the economy placing pressure on the situation, as experts and policymakers sound the alarm.

Reform Leader Nigel Farage said the country was getting 'gloomier' and 'poorer,' having more unemployment, as well as the country's debts 'running completely out of control.'

Increasing unemployment and declining job vacancies

Recent statistics of the purchasing managers index (PMI) of S&P Global showed a sharp rise in the number of Brits seeking employment in December. This influx of job seekers was accompanied by a dramatic decline in demand for new employees, indicating a weaker labour market by 2025.

The main indicator of permanent placements of the PMI dropped to 44.3, which is lower than the 50 indicator mark.

This is the first time that the indicator has shown the worst results since August 2025.

Meanwhile, the collapse of 'zombie' UK firms is forecast to fuel unemployment in 2026, although experts are cautious about the idea of a possible turning point.

There was also a sharp decline in temporary employment, which captured a wider slump in recruitment activities.

KPMG industry analysts and the Recruitment and Employment Confederation (REC) confirmed that December 2025 was the 39th month of decrease in permanent staff appointments.

The ongoing recession has created fears over the general well-being of the UK job market, with forecasts indicating that the trend can continue into the next few months unless the UK economy turns around.

The challenges between employers and candidates widen

The study indicates a significant decline in the demand for new employees by employers, and this situation is enhanced by an increasing number of potential employees as a result of continuous retrenchments.

This disparity has prevented job hunters, even more so as a number of them take a long time to find new jobs. It indicates a wider economic uncertainty and a lack of trust in the businesses, which are still reluctant to hire more employees in the conditions of the slow demand and increased cost of operations.

Hospitality, manufacturing, and financial services have been the direct victims of the slowdown in the number of hires.

The recession has been observed by industry experts to reverse previous positive views of the UK jobs market returning to its modest growth, which some economists had forecasted by the end of 2024.

Changes in policies and the implication to businesses

In the midst of such difficulties, the UK companies are also managing a maze of legal and regulatory environments.

New changes to employment legislation over the recent years introduced through the Employment Rights Bill have caused new strains and some alleviation.

The other aspects of the legislation are under intense scrutiny by the business leaders who are still unchanged or are in ongoing consultations. It is the hope of many to have the policymakers embrace more business-friendly reforms that can bring about growth and stability.

The industry leaders point out that the government should have clear strategies to help bring about economic sustainability, particularly when the country is coping with the recent changes in national insurance, among other fiscal limitations.

Industry-specific trends: finance and technologies

The recession is not equal in every industry. According to a recent survey by Morgan McKinley, there is a 13% drop in the number of financial services positions on offer in London over the past quarter of the year compared to the previous three months.

Broking and administrative positions have been reduced significantly and have been the worst hit. On the other hand, there are other industries, such as fintech, which have defied the trend, with recruitment activity growing 50% year-on-year.

The disparate tendencies in response to the economic pressures point to the unequal effects of such pressures in industries.

Although the movements of technology and digital transformation endanger the traditional finance roles through the contraction of opportunities in the market, the trend of fintech hiring is expected to remain positive, which can be regarded as a possible ray of hope in the otherwise difficult situation.

Prospective and policy recommendations

According to industry analysts, the recent slowdown could turn out to be a temporary low instead of a complete change in the pattern of employment. Neil Carberry, the CEO of REC, wrote that the data of December 2025 indicated a slight decline, but it may be the result of a bigger trend of weakening and not a full reversal of the growth.

He recommended the government provide more decisive policy directions to give assurance among the employers, and pragmatic solutions should be made in the new legislative environment.

Unless there are strategic efforts put in place, economic experts warn that the UK may experience long periods of unemployment and stagnation.