UK Employers Face Hiring Stagnation Amid Tax Hikes

UK Employers Pump Brakes on Hiring

Hold onto your hats, folks. In March 2025, UK employers were playing the waiting game, with 42% planning to leave their workforce untouched for Q2 2025. This pause came as businesses braced themselves for some not-so-fun financial rain clouds—also known as tax hikes—slated for April. The ManpowerGroup Employment Outlook Survey, a handy barometer for the Bank of England and the UK Government, indicated an air of cautious calculation blowing through boardrooms.

Tax Hikes: The New Elephant in the Room

With tax increases looming, the UK’s hiring landscape wasn’t looking too sunny. Another 11% of organizations didn’t know if or how their staffing would change, and among employers planning changes, hiring volume was down 27% compared with Q1. Businesses were prepping for the upcoming costs like marathon runners stretching before a race, slow and steady. ManpowerGroup’s Michael Stull said the hiring recession looked set to last until summer at the earliest.

Michael Stull, managing director of ManpowerGroup UK, echoes the sentiment, highlighting that fewer job offers are making employees hesitant to jump ship. Employers, he suggests, might want to focus on polishing their internal gem—also known as upskilling and motivating their teams.

Bright Spots Amid the Gloom

However, it wasn’t all doom and gloom. Energy & Utilities was the most active sector, with only 27% of employers planning no change to headcount, the lowest share of any sector. IT (35%) and Finance & Real Estate (37%) followed.

And here’s the plot twist: Industrials & Materials, Real Estate, and Transport & Logistics were forecasting net positive changes to hiring volume. If these sectors grow in a flat economy, it may signal that investment is trickling back into the UK.

But what about the public sector? Public sector recruitment was up, and the survey raised questions about how higher national defence spending and plans to drive up housebuilding might ripple out to private businesses.

Wrapping up his insights, Stull notes that economic uncertainty and cost pressures are very real hurdles for many companies. He advises those who can to navigate the maze and drive productivity. By late 2026, the mood had shifted: ManpowerGroup’s Q4 2026 survey put the UK’s hiring outlook at 23%, leading the largest economies in its region.

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