The Big Picture
It will surprise nobody to hear the employment market has been tough for a while now. The headwinds are well known: geopolitical instability, high inflation and low growth, a large budget deficit, cautious business outlook, increased costs of hiring – the list could go on.
Despite this, the UK economy’s performance has been much like a mid-range pillow: soft, but not quite down. Growth has been less disappointing than anticipated[1][2], and it appears reports of the UK’s productivity death were greatly exaggerated.[3][4]
Similarly, there are signs of life in the job market – the latest REC/KPMG report highlights a rise in permanent placements (the first since Sep 2022), while temp billings marked a fifth consecutive month of growth.[5]
Nevertheless, a big picture view always obscures nuance. Different sectors face different challenges and opportunities, which don’t always sit neatly in a macro summary.
This article is an attempt to look beyond the headlines and answer the question: “how are the sectors that we serve faring?”
Financial Services
Sentiment
Financial services remains an outsized presence in the UK economy, accounting for about 11% of output last year.[6] Last year was tough for hiring in the sector, being only the second time since the financial crisis that vacancies had fallen – the other year of contraction was 2020[7], which is fairly ignominious company to keep. There is some evidence though that the tide is turning, albeit non-uniformly.
KPMG’s latest sentiment survey found more than half of financial services firms expecting to increase headcount in 2026, with AI skills the shiny new toy on the wish list.[7] This may be cold comfort to those on the junior end of the career ladder, however: Bloomberg’s analysis of job board data found London finance analyst vacancies had fallen to around 80, from more than 350 four years earlier.[8] With AI tools increasingly excelling with spreadsheets, it’s likely we won’t see a reversal of this trend.
Overall, sentiment appears to be cautious. ICAEW’s spring survey found banking, finance and insurance among the least pessimistic sectors. (Faint praise, given that eight of the nine sectors surveyed were in negative territory, but praise nonetheless.)[9] However, that burst of not-quite-optimism may have already flipped, given the CBI’s quarterly survey recorded a collapse in sentiment from +31% in March to -34% in June[10], perhaps somewhat influenced by jitters around a prospective windfall tax on banks.[11]
Job market dynamics
As is covered in the full report, we have used vacancy rates as a key data point in assessing job market dynamics.
Briefly, the vacancy rate is the number of unfilled job vacancies divided by total jobs (both filled and unfilled). A high vacancy rate indicates a tight labour market, where job vacancies are abundant relative to people. Conversely, a low vacancy rate means lower demand for staff. Vacancy rate is therefore one of the clearest barometers for how employer demand stacks up against employee availability.
Despite somewhat guarded sentiment, hiring in financial services is proving resilient. Headcount has risen in Q1 and Q2, and firms expect more of the same in Q3.[10] And while vacancy rates are down from 3% a year ago, at 2.8% the sector still has one of the highest rates in the economy, running only slightly below its long-run norm.[12]
KPMG/REC data points the same way: accounting and financial roles were one of only two categories to see rising demand for permanent staff in August.[5]
The more interesting story lies underneath. As noted, the composition of hires is changing. Firms are competing for technology, data and AI talent, while automation is cannibalising the routine analytical work traditionally given to juniors. For experienced candidates with technical skills, this is a relatively propitious job market; much less so for those trying to get a foot in the door. The wider question of what this means for the traditional talent pipeline will only be answered with time.
Financial Services: the bottom line
After a difficult 2025, hiring in financial services is proving resilient. Headcount is rising and the vacancy rate is among the highest in the economy, even if sentiment has wobbled. Beneath the surface, though, the mix is changing. Firms are competing hard for technology, data and AI skills, while automation is eroding the routine work traditionally given to juniors.
For employers: expect stiff competition for technical talent, and move quickly when you find it. But think carefully about the junior pipeline: a thinned-out entry level today risks becoming a mid-level shortage tomorrow.
For candidates: experienced professionals with technical skills are in a strong position. Those starting out should lead with demonstrable data and AI skills, and be open to routes in beyond the traditional analyst role.