Recruitment challenges continue to weigh on business growth

The latest figures from the British Chambers of Commerce (BCC) show that firms across the UK are still struggling to recruit the people they need, despite a rise in unemployment

The BCC’s Quarterly Recruitment Outlook (QRO) for the third quarter of 2025 reveals that just over half of businesses (54 per cent) attempted to hire staff in the past three months, a small drop from 55 per cent in the previous quarter. Of those trying to recruit, three-quarters (75 per cent) reported difficulties in finding suitable candidates, up slightly from 73 per cent in Q2.

The survey, conducted between 18 August and 15 September, gathered responses from more than 4,600 businesses, 91 per cent of which were small and medium-sized enterprises (SMEs).

Recruitment challenges remain particularly acute in the construction sector, where 85 per cent of firms reported difficulties – a significant rise from 77 per cent in the previous quarter. Other service industries followed closely at 78 per cent, while transport, hospitality and professional services each reported challenges at 74 per cent.

Most businesses have not expanded their teams, with 61 per cent saying staffing levels remained unchanged in Q3. Less than a quarter (22 per cent) increased the size of their workforce, slightly down from 23 per cent in Q2. Looking ahead, 63 per cent expect no change in headcount over the next three months, while 12 per cent anticipate reductions and 25 per cent plan to increase their workforce.

Labour costs continue to be the biggest financial pressure, cited by 72 per cent of firms, with hospitality (80 per cent) the hardest hit and retail (66 per cent) the least affected. Despite these pressures, training investment remains static, with only 24 per cent of businesses increasing training spend in Q3, compared with 23 per cent in Q2. More than half (57 per cent) made no change, while 19 per cent reduced training budgets.

Jane Gratton, Deputy Director of Public Policy at the BCC, said the findings underscore the ongoing pressures facing employers.

“Employers are battling against sky-high employment costs and widespread skills shortages. The stark reality for firms trying to recruit is that it’s still far harder than it should be. Unless more is done to boost access to skills and contain employment costs, economic growth will remain stunted.

“The skills crisis also has far-reaching implications for government policy. While Ministers have pledged to get the nation building again, with recruitment difficulties in construction spiking to 85 per cent, delays to getting vital infrastructure in place are inevitable.

“And with 72 per cent of firms saying costs are putting pressure on them to raise prices, the spectre of higher inflation will continue to hover.

“The situation is not improving, and there is a growing urgency to find solutions. The new technical excellence colleges will help increase the supply of some vital skills. But much more needs to be done, and the coming budget presents a golden opportunity to unlock potential through targeted investment and incentives.

“There is a huge talent pool in the UK that remains untapped. Almost a million young people are not working, training or in education, while three million people are missing from the workplace due to long-term sickness.

“The Government should use the tax system to help people stay in, or quickly return to, employment when they experience ill health. Tax breaks for health services that businesses provide to their workforce are an obvious solution to protect people’s livelihoods and keep skills in the workforce. And for those struggling to get into work, we need a wage subsidy scheme, similar to Kickstart, to unlock employment opportunities for young people with long-term health conditions.” battling against sky-high employment costs and widespread skills shortages. to boost access to skills and contain employment costs, economic growth will remain stunted.

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