UK Wage Growth Hits a Wall: Hiring Slowdown Accelerates in Q4 2025

Britain's labor market grinds to a halt as employers slam the brakes on hiring.

Paychecks freeze while job openings evaporate

The once-hot UK job market is now running on fumes. Wage growth—previously the lone bright spot in Britain's economic dashboard—has flatlined as companies across sectors hit pause on recruitment. The Bank of England's inflation fight just got trickier with workers losing bargaining power.

Finance sector first to blink

City firms lead the retreat, trimming headcounts after realizing A.I. won't replace traders—but might replace their overpaid middle managers. Meanwhile, crypto-native firms keep hiring, because when your business model survives 90% drawdowns, regular recessions barely register.

The great 'labor shortage' narrative collapses faster than a leveraged altcoin. Turns out workers weren't 'quiet quitting'—employers were just loud cheaping.

Modest wage uptick keeps UK firms wary

Economists mentioned that wage trends will be crucial for Bank of England policymakers during their meeting in December to help them consider whether to reduce interest rates.

Currently, policymakers are taking into account more indications for wage hikes, and other factors that have been keeping inflation high are now beginning to drop. This is after they narrowly decided to maintain rates unchanged during their last meeting.

Regarding the REC’s recent report, sources mentioned that this report adds to a sense of caution among businesses as they get ready for expected tax hikes in the upcoming budget. However, analysts conducted research and discovered that some signs of hiring slowdowns are starting to improve. 

Their discovery was noted after sources highlighted that the number of job openings and permanent placements in the country dropped at a slightly slower rate. At the same time, temporary billing surged for the first time since June 2024. 

Jon Holt, Group Chief Executive and UK Senior Partner at KPMG, commented on the topic of discussion. Holt mentioned that, “Economic uncertainty still heavily impacts businesses, but last month’s improvement in the jobs market suggests that a budget focused on boosting business confidence could lead to more hiring.”

When reporters reached out to several business groups to weigh in on the situation, they pointed to the £26 billion rise, equivalent to approximately $34.4 billion, in payroll taxes made public by labour a year ago, as the primary factor behind the job losses and rising inflation.

In the meantime, it is worth noting that the Chancellor of the Exchequer, Rachel Reeves, is just two weeks away from presenting another challenging budget that is anticipated to impact everyone. According to sources close to the matter, this budget may have a significant impact on the job market as it begins to recover from its challenging times.

Neil Carberry, chief executive at REC, stated that this is not the first time to experienced such a situation. According to Carberry, a similar feeling was encountered in the jobs market before last year’s Halloween Budget from the Chancellor. He argued that, as businesses cautioned back then, they experienced higher unemployment and layoffs. Therefore, the chief executive warned that as they approach Budget 2025, they cannot afford to go through this situation again. 

Reeves aims to close an expanding gap in the UK’s public finances

Reports dated Monday, November 10, highlighted that Reeves is attempting to close an expanding gap in the UK’s public finances that she thinks has been made worse by US President Donald Trump’s trade war, global conflicts, and the downgrading of UK productivity by the Office for Budget Responsibility (OBR).

According to the Chancellor of the Exchequer, this situation has restricted her financial options. Therefore, Reeves argues that she has to account for taxes and spending in her November 26th budget.

At this time, she was due to receive the last economic forecast from the Office for Budget Responsibility, the government’s watchdog. This report was anticipated to include specifics about the size of the budget gap that Reeves needs to cover.

Reeves previously mentioned that she is seeking a larger financial buffer than the £9.9 billion ($13 billion) she had in her 2024 budget and again in her spring statement in March.

Get seen where it counts. Advertise in Cryptopolitan Research and reach crypto’s sharpest investors and builders.