The Labour Budget has landed — and with it, a lot of noise, questions, and uncertainty. So the morning after the announcement, we hosted a live session with Julius Probst, Senior Economist at Appcast, to break down what it all really means for the UK labour market.
For 45 minutes, Julius and Wave CEO Dave Jenkins explored the good, the bad and the downright complicated parts of the Budget, cutting through the headlines and focusing on what matters most to recruiters, employers and the wider workforce.
Here’s a recap of the biggest insights from the session.
1. First things first: it wasn’t a disaster
Given the UK’s fiscal position — debt close to 100% of GDP and £100bn a year spent on interest payments — there was a real risk that the Budget could spark market instability.
The good news, according to Julius? Financial markets responded calmly.
No repeat of the Liz Truss moment. No sudden drop in the pound. No panic.
That stability matters. When markets feel steady, businesses feel safer making decisions — hiring, investing, expanding — instead of sitting on their hands.
2. But the growth we all want still isn’t here
While forecasts have ticked up slightly, the Budget didn’t include the kind of growth-focused measures economists often hope for.
Julius put it plainly:
The budget wasn’t a disaster, but it also wasn’t particularly growth-enhancing.
Infrastructure investment, housing reform, and long-term productivity measures were largely missing. Good for stability, not so good for acceleration.
3. Minimum wage rises: good intentions, tough consequences
One of the most controversial changes was another significant increase in the minimum wage.
Good for workers, yes — but Julius explained why this isn’t so simple for the labour market:
- It increases cost pressure on sectors with thin margins
- It risks pushing up inflation just as the UK tries to bring it down
- Younger workers will likely feel the impact first
- Hospitality and retail, already struggling, may freeze hiring or cut hours
Wage growth at the bottom is important. But pushing it too far, too fast can hurt the very people it’s intended to protect.
4. The salary sacrifice shake-up — a big one for high earners and employers
One change that flew under the radar:
From 2029, salary sacrifice will incur National Insurance contributions — including a 15% bill for employers.
For companies with highly paid staff who put large sums into pensions, this is a quiet but meaningful tax rise. Julius called it what it is:
A stealth payroll tax on productive sectors.
Recruiters working with tech, finance, consulting, or senior appointments should keep an eye on this shift.
5. White collar slowdown, blue collar strength
Julius highlighted a growing split in the labour market:
White collar
Vacancies remain around 20% below pre-Covid levels, with some areas of professional services still seeing layoffs or freezes.
Blue collar
Demand remains strong — even heating up — as roles in construction, engineering, repair, energy, and skilled trades continue to face shortages.
Infrastructure plans, defence investment, and delayed backlogs (like solar installations) all point to continued resilience in manual and skilled labour roles.
A word Julius used more than once: “Shortage.”
6. Younger people are facing the hardest conditions
With almost 1 million people currently NEET, younger workers are disproportionately affected by the slowdown.
When labour markets tighten, entry-level roles are always hit first. Minimum wage increases for under-21s won’t help, Julius warned, especially for sectors that rely on first-job workers.
Recruiters focusing on early careers will need to be even more proactive in 2025 and 2026.
7. Migration tightening could widen skills gaps
Changes to migration rules have significantly reduced net migration compared to the post-Covid boom.
While the Government is consulting on improvements for highly skilled workers — including faster routes to residency for top earners — Julius expects shortages to remain in:
- Care
- Social services
- Construction
- Manufacturing
- Hospitality
A tighter visa system plus rising wage pressure equals a challenging hiring landscape for lower-paid but essential roles.
8. Consumer confidence has been holding the UK back
Both Julius and Dave noted that spending has been unusually cautious throughout 2024 and 2025.
Anxiety around the Budget slowed consumer activity, which in turn slowed business activity, hiring, and investment.
The silver lining? Now that the Budget is done, some of that uncertainty lifts.
As Julius put it:
Uncertainty has been weighing on consumers and employers. With the Budget behind us, confidence may start to return.
If spending picks up over Christmas and into Q1, hiring could follow.
9. So… what should recruiters expect next?
Here’s the outlook based on Julius’ analysis:
The next 6–12 months
- Slow but steady growth
- Continued stagnation in some white collar areas
- Blue collar resilience
- Hiring freezes easing — especially once interest rates start to fall
- Wage pressure remaining high
Sectors to watch
- Construction (infrastructure plans)
- Defence (spending commitments)
- Healthcare (ageing population + chronic shortages)
- Education (consistent long-term demand)
- Renewables & energy (structural growth)
10. The big positive: the waiting is over
Dave wrapped up the session with what might be the most important mindset shift:
The good news is that it’s done. People have been waiting — to hire, to expand, to invest. Now we know where we stand.
Budget uncertainty slows hiring more than almost anything else.
With the announcement out of the way, agencies and employers can start making decisions again.
Final thoughts
This Budget won’t transform the economy overnight. It won’t fix productivity, wages, or growth in one go. But it also didn’t break anything — and in a climate this fragile, that matters.
Recruiters can expect:
- A more stable environment
- A moderate uplift in hiring confidence
- Continued pressure in low-margin sectors
- Growing opportunities in infrastructure, skilled trades, defence, healthcare, and education
And the big one: More clarity.
Clarity beats uncertainty every time.
If you want to explore more of Julius’ thinking, he’s written a detailed breakdown of the Budget in the Recruitonomics blog.
