The revision by the OECD that Britain’s GDP growth for next year will be higher than initially thought will be welcome news to Rachel Reeves and Kier Starmer. Indeed, the increase has been from 0.4% when forecast in May, to 1.1% now. At a time when the Government are facing acrimony over their budget, and business confidence is deteriorating, it is important to understand though, that the reason why the forecast has been lifted is due to the planned investments into the public sector, encompassing:

• Great British Energy
• Housebuilding
• HS2
• Other initiatives*

The Civil Service is also growing year on year, and is now at a record high of 543,000 employees, up from 2023, when there were 520,000, meaning that just in the last twelve months, the organization has grown in headcount by 5%. At a time when taxes are rising, pressure will increase on productivity to increase, yet the latest ONS reporting here shows that this has fallen by 1.2% in Q2 2024 versus Q1 and remains 8.5% below pre-pandemic levels. With the further growth planned into the Public Sector, the forecast is for the size of the civil service to grow further, at a time when the impact of the budget is also likely to translate into interest rates remaining higher for longer, which will act on a constraint for growth in the private sector.

So what should recruiters do to insulate themselves?

1. If your clients are in the private sector, identify those with either an international outlook, or public sector focus. They are likely to outperform other companies. For example, see the recent tie up between Barratt Homes, Lloyds and the Government, to expedite housing and finance for purchasing.
2. If you can’t do that, focus on high-growth sectors. If you are a Banking Recruiter, pivot to Fintech. If you are a legal recruiter, maybe grow out a lawtech division. Over time, the cannibalization that is happening due to disruptive VC backed companies is only likely to continue.
3. Finally, focus on where the biggest changes are in terms of skills in demand, and where you see the surges, get ahead of the market and talk to candidates there. In every professional area, companies change their needs, resulting in skills becoming in demand, where previously they weren’t. For example, with marketing roles, content roles have seen a significant pick up as companies realise that generative AI has its limits, so if they do use Chat GBT, then their content becomes bland and a turn off. Hence there has been a pick up here, both in-house and in agency.

At Vacancysoft, we work with our clients on all these areas, from helping to identify suitable fast growing adjacent markets, through to identifying surging skills in demand, to keep you ahead, even when the economy is facing headwinds. To find out more do contact us.