No let-up on labour cost pressures in the Spring Statement

Today’s Spring Statement remained focused on creating the conditions for stability, delivered with a strong party‑political tone. The Chancellor highlighted the OBR’s improved figures in the Spring Forecast, including reduced borrowing, higher projected growth, and fiscal headroom rising to £23.6 billion compared with the Autumn projections. However, as she noted, every “pound of growth could be wiped out by a change of course,” whether through shifts in government policy or external factors such as geopolitical risk and global trade developments.

Responding to the Chancellor’s announcements, Tania Bowers, Global Public Policy Director at the Association of Professional Staffing Companies (APSCo), comments:  

 “The forecast suggests more bumps in the road for the recruitment sector, with labour supply growth slowing to 0.5% by 2030. This is driven by lower net migration and an ageing population, resulting in lower participation rates and reduced average working hours.

“Currently, unemployment is high at 5.3% in the final quarter of 2025, with youth (16–24) unemployment at a staggering 16%. This reflects the growing issue of increased regulation and rising costs, coupled with a persistent skills mismatch in the labour market and a longer‑term trend of declining participation.

“With that in mind, the Chancellor’s ongoing focus on raising youth labour market participation and increasing investment in AI is sound.

“However, this alone will not create the conditions needed for growth, particularly in highly skilled IS8 sectors. A two‑track skills strategy is essential — one that includes employer-designed progression pathways, more flexible Growth and Skills Levy spending options, and facilitated career transitions to support longer working lives. So far, Skills England is under‑delivering.

“With employers and recruiters acutely aware of geopolitical risk and facing extensive regulatory changes, it is no surprise that hiring intentions remain subdued, dampening growth potential — an issue highlighted by the OBR in its Spring Forecast. The Government must recognise the scale of change required to implement the Employment Rights Act, delay aspects where economic conditions necessitate it, and — critically — listen to business.”