Businesses are feeling more confident about the national economy and their own prospects, according to the Recruitment and Employment Confederation’s (REC) latest Jobs Outlook.
In the latest representative survey of almost 500 employers across the country, the picture was at its most positive since early 2022.
According to the REC points system, businesses reported that confidence in making hiring and investment decisions for their own firm surged by 12pts to a balance of +16 in the three months to June, while their outlook on the wider economy also improved, though it remains in negative territory (up 7pts to -29).
However, the report has evidence of the short-term pauses that recruiters have reported during the general election campaign, with all classes of hiring intentions neutral-to-positive, but at marginally weaker rates than previously.
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With inflation lower and firms anticipating a pattern of lower interest rates, the economy is allowing more space for positivity. Much now depends on how employers react to the new government’s policies on employment and welfare-to-work, especially how seriously and promptly they act on the pre-election and King’s Speech commitment of a partnership approach with business.
Neil Carberry, REC chief executive, said the return of confidence was “vital to the growth mission that the government has set itself – rightly putting the economy at the heart of its plan”.
“Businesses will be looking to take the brakes off when they can, and there is a big role for an industrial strategy in sustaining confidence with long-term stability,” he said. From tax to transport, skills, trade and regulation – clarity and stability matter to building up employers’ willingness to grow.”
However, higher employment and lower inactivity could only happen where the UK adopted the right approach to jobs, Carberry added, “encouraging employers to take a chance on people and catering to the flexibility workers need. Establishing a partnership with business quickly on the design of these steps is not optional – it is critical to their success.”
Earlier this week the government set out its plans to tackle the rising tide of economic inactivity – which ministers have identified as a major factor in prohibiting growth. Work and pensions secretary Liz Kendall insisted that the DWP will shift its focus from “a Department of Welfare to a Department for Work” as part of its Back to Work plan.
She said there would continue to be conditions placed on those looking for work and consequences for not doing so, but that the emphasis would be on addressing the factors preventing people from working rather than punishing them.
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