Some people blame global forces, for others, the economic slump seen since last summer can only be attributed to the decisions of the current Government. One thing that is clear, is that the economy has slowed down since autumn, and there is set to be an inflationary shock in April, as the impact of the budget takes effect. Key inflationary policies include:

• An increase to the minimum wage
• Changes to NICS thresholds
• Energy investments and subsidies, specifically in fossil fuels, being tapered

Proposed welfare reforms have also been noted by the OBR, where as a result, despite economic headwinds, the impact of the proposed reductions in spending should restore the surplus from the October Budget.

Against this backdrop, the OBR has given its forecast, that growth is set to slow down this year, yet in what was a positive, they have announced, that growth should then pick up after that, but only after an interjection by the chancellor on what the value would be of the proposed planning reforms. Looking ahead, businesses are adjusting to the new reality, where in certain sectors, the impact has been larger than others.

Hospitality, Retail and Consumer Goods & Services has been some of the most impacted, in part because of the proposed changes on NICS thresholds and what they mean for part time work. Similarly, in sectors with generally low profit margins, the impact of the minimum wage increase has been to cause a slowdown in hiring generally, as businesses readjust to the new reality.

However, there is set to be a boom for the Defence industry, as the commitment to increased spending starts manifesting. Assuming the UK are then able to negotiate a security agreement with the EU, this would mean British businesses such as BAE systems, would also be able to bid for EU projects also. The Government is also applying pressure so defence companies can source funding more easily from capital markets.

Against this backdrop 2025 job flow has picked up, with there being more vacancies in January than either November or December.

However, the shadow of Trump though looms large. The OBS have predicted that should his tariffs take effect in the way he has indicated, it would result in GDP falling by 1%. In that instance, it would mean the UK would be on the verge of recession. Hence the Government is doing what it can to negotiate a solution, with the digital services tax in the firing line.

With that, whatever happens, debt is set to be higher than previously forecast – equally the best case scenario for the UK is a negotiated agreement with both the USA and EU. Whether Starmer can thread that needle is another question.

For recruiters, the current climate presents both opportunities and threats. Employers will be looking for insight, so for firms able to provide analysis around the changing demand for skills, who is most active in hiring and what is happening regarding salaries, providing such insights using data, will have a natural advantage over those who don’t. If you would like to talk to us, about how we can help you use data to power your growth, get in touch.