Employment slowdown hits London as vacancies fall for 39th quarter

The UK job market is showing signs of fatigue, with an employment slowdown hitting London as vacancy numbers fall for the 39th consecutive quarter. While redundancies remain low, hiring activity has weakened, and economic inactivity has barely shifted, suggesting that employers are cautious ahead of the Chancellor’s next Budget.

The capital’s financial heart, the City of London, remains a hub of opportunity but faces growing pressure. “Today’s job figures show the City remains a magnet for talent and opportunity,” said Chris Hayward, Policy Chairman of the City of London Corporation. “But with global competition intensifying, the Chancellor must resist further business taxation and ease burdens on financial services. Otherwise, we risk stalling the engine of our economy.”

What the figures show

• The employment rate for people aged 16–64 stands at 75.1%, slightly down on the quarter.
• Unemployment has risen to 4.8%, up 0.2 percentage points since spring.
• Economic inactivity remains steady at 21.0%.
• Job vacancies have dropped by 9,000 to 717,000 this quarter.
• Vacancies are now below pre-pandemic levels, falling across half of all industry sectors.

These latest figures, drawn from the Office for National Statistics, confirm that the slowdown in hiring has become a sustained trend rather than a temporary dip.

Stephen Evans, Chief Executive of the Learning and Work Institute, said: “Falls in employment and vacancies were smaller than earlier this year, suggesting the labour market is flattening rather than crashing.”

The City reacts

Hayward emphasised that the Destination City initiative, the Corporation’s programme to attract global investment and visitors, continues to strengthen the capital’s international standing. But he warned that maintaining London’s competitiveness depends on “ensuring the City remains a place where enterprise can thrive.”

Neil Carberry, Chief Executive of the Recruitment & Employment Confederation, said: “The market remains challenging for employers who are waiting for a real upturn in economic confidence. The gap between public and private-sector pay is becoming unsustainable, creating uncertainty across industries.”

For London businesses, the challenge now lies in balancing caution with innovation. The City of London Economic Research team has consistently argued that targeted skills investment and maintaining global openness are key to sustaining the Square Mile’s productivity.

Young workers under pressure

The slowdown is also testing younger workers. More than one in ten 18- to 24-year-olds are unemployed, and almost one in five are classed as economically inactive, a sharp increase since 2021. Data from the Learning and Work Institute suggests that long-term youth unemployment is rising, leaving many struggling to gain a foothold in the job market.

Experts are calling for expanded apprenticeships and upskilling initiatives backed by the Department for Education to bridge this gap and help employers fill critical roles in sectors such as technology, healthcare, and green energy.

Outlook

Economists say the market is stabilising rather than collapsing, but momentum has clearly slowed. London’s long-standing role as a driver of national growth depends on restoring employer confidence and ensuring that both businesses and workers adapt to a slower, more cautious environment.

As Hayward concluded, “If the UK is to remain the best place in the world to do business, we must not choke off growth with unnecessary burdens. The focus should be on opportunity, not constraint.”

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