As the UK economy adjusts to a new equilibrium as a result of the change in Government, there have been positive signs of a rebounding in recruitment. Nonetheless, it is worth mentioning that a fair amount of the July hiring was due to vacancies being deferred from earlier in spring, as companies waited on the result of the election. Once the Labour Party was confirmed as having won, companies removed the hiring freeze and moved ahead with the vacancies they had planned for.
Within a week of coming to power, Starmer committed to stand with Ukraine, for as long as it takes. As part of that he then committed to new package of artillery and brimstone missiles to be delivered shortly, as well as placing a new order for soviet era ammunition, to help bolster Ukraine’s defences. Hence, the bounce seen across the UK economy in July, was most pronounced in Aerospace & Defence, with vacancies rising month to month by over 40%, and hitting levels last seen in November last year.
For everyone involved in IT recruitment, the burst of activity seen in July was a welcome relief, as vacancies ended up hitting levels not seen since Q1. Indeed, the final total for the month, was the third highest since April 2023. Nonetheless, the pragmatists will recognize that the general election being announced in May, resulted in many businesses deferring investment decisions, including hiring, until after the result, which had meant that Q2 was materially quieter than Q1. So the burst in July could just be the result of that pent up demand being recognized.
As soon as the General Election was called, it became clear that the second half of the year would see a surge in recruitment in House building. Therefore it is not a surprise that vacancies in Real Estate in July hit record levels. Whilst the Conservatives had tried to implement mandatory house building targets under Gove, such was the resistance from their core constituencies, it was soon dropped. For the Labour Party, they have no such constraint, and as a result, have reinstated the target, and increased it.
The post-election bounce is real. When the vacancy volumes are analyzed by weekly totals, it is in July that the record total for the year has been posted. While this can be a function of the immediate post-election bounce, the wider economic news for the UK is broadly encouraging. The British Economy in Q1 grew by 0.7% which was the strongest expansion seen in over two years, and as a result, has beaten all forecasts. Insofar that Q2 is likely to be flat, that can be attributed to the dampening effect of the general election, hence the fact there was a jump in vacancies in July is a good sign.
With the Labour Party now in-situ, changes are being proposed to employment law which have the potential to be transformative to the UK, where the minimum wage is a key area being scrutinised. The proposal to scrap the tiered structure of the minimum wage, which means that there will be no difference in treatment, between those aged 16 year olds or those over 21 has the potential to cause a significant impact in the job market in terms of entry level roles. The question is, what are the likely second order consequences?
