[UK] Small firms slowed hiring amid economic uncertainty

New research has found that employment growth among the UK’s small businesses has slowed over the past year, with the impact of rising costs, regulatory changes and economic uncertainty taking a toll, People Management reports.

Employment Hero’s latest Jobs Report is based on the employee records of more than 115,000 small businesses. It revealed that year-on-year employment growth dropped from 7.8 per cent in December 2024 to 2.5 per cent in December 2025.

SMEs reportedly closed out the year more cautiously. December saw a 0.5 per cent month-on-month increase in employment, the weakest monthly rise since April. 

Retail and hospitality - sectors which ordinarily increase hiring to meet festive demand - were among the hardest hit, with employment falling by 2 per cent in December.

Additional cost pressures for small businesses came from the 2024 autumn budget. Employment fell 1.1 per cent in response in April, with growth subsequently struggling to recover.

Kevin Fitzgerald - UK managing director at Employment Hero - said, “Our latest figures show that, while small businesses remain resilient, they are cautious, with employment growth slowing and the usual seasonal surge failing to materialise. Many are still adjusting to changes from the budget, and structural barriers continue to hold back investment and growth.”

Source: People Management

(Quote via original reporting)

New research has found that employment growth among the UK’s small businesses has slowed over the past year, with the impact of rising costs, regulatory changes and economic uncertainty taking a toll, People Management reports.

Employment Hero’s latest Jobs Report is based on the employee records of more than 115,000 small businesses. It revealed that year-on-year employment growth dropped from 7.8 per cent in December 2024 to 2.5 per cent in December 2025.

SMEs reportedly closed out the year more cautiously. December saw a 0.5 per cent month-on-month increase in employment, the weakest monthly rise since April. 

Retail and hospitality - sectors which ordinarily increase hiring to meet festive demand - were among the hardest hit, with employment falling by 2 per cent in December.

Additional cost pressures for small businesses came from the 2024 autumn budget. Employment fell 1.1 per cent in response in April, with growth subsequently struggling to recover.

Kevin Fitzgerald - UK managing director at Employment Hero - said, “Our latest figures show that, while small businesses remain resilient, they are cautious, with employment growth slowing and the usual seasonal surge failing to materialise. Many are still adjusting to changes from the budget, and structural barriers continue to hold back investment and growth.”

Source: People Management

(Quote via original reporting)