Permanent hiring in the UK has just come out of its longest downturn on record. That is not the same as saying the market has turned. It means the ground has stopped falling away, and what happens between now and early 2027 depends on how employers use that stabilisation.
We spend our days in this market, not reading about it from a distance. Here is what we are actually seeing and what it means for anyone planning to hire before the year is out.
Is business confidence in the UK job market actually improving?
Yes, cautiously. Permanent placements have stopped falling after a long, grinding decline, and vacancies are not disappearing at the rate they were 12 months ago. That is a real shift, but it is a shift in the rate of decline, not a return to growth. Employers who paused hiring plans earlier in the year are starting to revisit them, though few are moving quickly. Most want two or three months of steadier trading before they commit to a permanent headcount increase, which is a sensible instinct given how many false dawns this market has produced since 2022.
The businesses moving first tend to be the ones who never fully stopped, the ones who kept a shortlist warm rather than starting from zero. That single decision, keeping a pipeline open through the quiet months, is proving to be the difference between hiring well in September and still advertising in December.
What should employers plan to pay in the second half of 2026?
Modestly more, and unevenly. Most employers are planning pay awards around three percent, which sits below what many candidates are asking for once they factor in two years of rising costs and April's increase to the National Living Wage. That gap between what businesses can afford and what candidates expect is the single biggest source of friction we see in offer negotiations right now.
It is not evenly spread. Sectors with genuine skills pressure, finance, engineering, senior HR, are seeing sharper increases than the market average, while roles with a larger candidate pool are seeing far more restraint. Employers who benchmark properly before they advertise, rather than after a candidate pulls out over money, are having noticeably shorter time to hire.
Where are the sharpest skills shortages right now?
Anywhere data, technology or AI touches the role, and in the specialist finance, engineering and HR positions that have been hard to fill for years regardless of the wider economic backdrop. The interesting part is that this shortage sits inside a market that looks cautious on paper. Overall vacancy numbers are down. Demand for a small number of specific skill sets has kept rising anyway.
That combination catches employers out. They assume a slower market means an easier hire, then discover the one person with the right systems experience or sector background is fielding several offers, not none. If a role needs a genuinely scarce skill, the timeline to fill it has not shortened just because the wider market has cooled.
Has flexible working settled into a fixed pattern?
Broadly, yes, though the detail keeps shifting. Hybrid working is no longer a negotiating point in most office-based recruitment conversations. It is an assumption candidates bring into the first call. Where the argument has moved is on how many days in the office count as reasonable, with a growing number of employers settling on a fixed two or three day pattern rather than leaving it open.
Candidates read a rigid five day mandate as a warning sign, and a completely open policy as a lack of structure. The employers getting the best response are the ones with a clear, consistently applied pattern they can explain in one sentence during an interview, rather than a policy that changes by manager or by department.
Is AI actually changing who gets hired?
Less than the headlines suggest, for most employers. A small number of businesses are hiring specialist AI and data roles at real pace, and those candidates can name their price. The much larger group of employers we work with are still working out what AI means for their team, not yet building job descriptions around it.
Where it is changing hiring quietly is in expectations. Candidates increasingly ask how a business is using AI day to day, and a vague answer no longer lands well. On the recruitment side itself, some of the strongest candidates now expect a human conversation, not an automated screening process, and treat that human contact as a sign of how seriously a business takes its people. That is where an agency relationship earns its keep.
Why is temporary and interim recruitment growing so fast?
Because it lets a business access skills without committing to a decision it is not ready to make. Temporary billings have grown faster than almost any other measure in this market over the past year, and the reason is straightforward. Permanent hiring carries a level of commitment that feels riskier when trading conditions are uncertain. Bringing in interim cover for a specific project, a parental leave gap or a peak period lets a business keep moving without that exposure.
We are also seeing more businesses use a temporary placement as an extended interview, converting strong performers to permanent roles once confidence returns. For candidates, interim and contract work has stopped being a fallback option and become a deliberate career choice for people who want variety and control over their next move.
What should employers expect between now and early 2027?
More of the same trend, but slowly. Permanent hiring should keep improving through the autumn without returning to the volumes seen before 2022. Pay growth will likely stay close to current levels rather than accelerating, unless a business is competing for one of the genuinely scarce skill sets, in which case the usual rules will not apply.
Flexible working arrangements will keep hardening into fixed, explainable policies rather than loosening further. Temporary and interim placements should keep growing as businesses use flexible workforce strategies to manage a market that still does not feel fully settled. The employers who come out of this period ahead will be the ones who treated the last few months as a chance to build relationships with strong candidates, rather than waiting for a green light that arrives all at once. It rarely does.
If you are trying to work out what any of this means for your own hiring plans, we would rather have that conversation directly than let you guess from a report. More than 25 years in this market has taught us that the detail always matters more than the headline. Get in touch with the ACR team to talk through what the rest of 2026 looks like for your business.