UK recruitment: Market positioned for an upturn in 2025 despite continued challenges

16 December 2024

Neil Thomas, national head of recruitment and partner at RSM UK, comments: “It’s clear that the recruitment sector has encountered a challenging environment in 2024 continued from the previous 12 to 18 months, with recruiters generally experiencing a stop-start year in the face of macro-economic factors. The end of the post-Covid hiring boom in 2022 and related wage inflation meant many businesses had managed headcount and reshaped their cost base coming into 2024, and there was some optimism early in the year. However, employer confidence and hiring appetite has been impacted by sticky inflation, slower-than-hoped interest rate reductions, and uncertainty in the run up to the election and then the Autumn Budget.

“Despite these challenges and a prolonged soft market, there is hope of a market upturn at some point in 2025, albeit gradual, with some of these issues now behind us and government spending set to accelerate economic growth to almost 2%, as outlined in our latest Quarterly Economic Outlook. We therefore expect the sector to see a fairly flat start followed by a steady increase in activity later in the year. Headwinds such as the National Insurance contributions (NIC) increase and certain aspects of the Employment Bill, will inevitably influence strategic shifts in pricing and employee engagement, but they can be factored into plans now bar any unexpected changes.

“Looking ahead, we expect recruiters will likely be focusing on effective data management to drive their business, leveraging advanced analytics to provide deeper insights into market trends, candidate behaviours, and performance metrics to enable insight for strategic decisions. While digital advancement and implementing AI will be a strategic priority for most businesses, the quality of client and candidate relationships will remain key. Therefore, community initiatives and events to increase engagement, strengthen relationships and foster loyalty will be a valuable tool for recruiters.”

He added: “Although 2024 has presented significant challenges for the sector in general, having navigated a prolonged soft market, recruiters are generally well prepared for what will hopefully be an upturn in the market during 2025.”

Neil  Thomas
Partner, Head of Recruitment Sector
Neil  Thomas
Partner, Head of Recruitment Sector