Year-in-Review Magazine: A New Year, A New Government – What’s next for the UK employment market?
- Policy Shifts: New governments in the UK and USA bring significant economic and political changes.
- UK Challenges: Higher taxes and employment costs strain businesses, especially in retail and consumer goods.
- Global Instability: Trade tensions, EU political instability, and geopolitical risks impact markets.
- Tech & Defence Growth: UK leads in SMRs, fintech, AI, and defence, driving economic opportunities.
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A new year brings a new government, in both the UK and the USA, with significant policy shifts in both countries.
In the UK, increased National Insurance contributions, a higher minimum wage, and expanded employment protections have resulted in hiring slowdowns, reduced investment, and redundancies. This, combined with additional tax reforms (e.g. ending non-dom status), has further strained the retail and consumer goods sectors, contributing to their most challenging conditions in a generation.
Internationally, Donald Trump’s return to office is reshaping the world order. Over the past four years, his “MAGA” slogan has evolved into a structured policy platform, with trade tariffs being an opening salvo. China has already felt the impact, and the EU may be next. Political instability in France and Germany weakens the EU’s cohesion, while escalating tensions with Russia heighten uncertainty. Ukraine asserts that any lasting peace agreement will require U.S. backing, yet NATO’s strategic direction is uncertain.
In Asia, China’s military expansion and ambitions toward Taiwan, responsible for over 90% of high-end global semiconductor production, pose significant risks. U.S. efforts to curb China’s technological progress face new challenges, particularly with AI advancements like Deepseek, which reportedly rivals OpenAI at a fraction of the cost. In this increasingly unstable global landscape, the defence sector is poised for substantial growth.
Despite this, the UK remains well-positioned for economic growth:
• STEM and Defence: The UK is a global leader in Small Modular Reactors (SMRs), with the potential to reduce energy costs and re-establish the country as an energy exporter. Increased defence spending also presents opportunities for British defence firms. Additionally, the UK maintains its status as a leader in Life Sciences.
• Fintech and AI: The UK continues to lead in financial technology, with companies such as Wise and Revolut driving global expansion. AI is transforming industries, and the UK ranks among the top three global players.
• Construction and Housing: Government initiatives are expected to drive a construction boom, with over one million new homes planned for this parliamentary term.
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