It has been two weeks since the Chancellor delivered her second Autumn Budget, setting out a programme built around higher taxes, targeted industrial support and a renewed commitment to long-term competitiveness. This Budget set out the scale of the fiscal challenge and outlined a more intervention-focused ambition to reshape the UK’s industrial base.

From a recruitment standpoint, the direction of travel is already evident: rising employment costs are prompting more deliberate headcount planning and a stronger emphasis on the value and impact of each hire.

Compared with the Spring Budget - which introduced no major tax or spending changes and largely preserved the existing fiscal framework - the Autumn Budget represents a significant shift. It raises around £26 billion through extended income-tax and National Insurance threshold freezes, increased taxes on savings, dividends and property income, reduced pension tax relief, and new measures such as a high-value property council-tax surcharge and a mileage charge for electric vehicles. Alongside these tax changes, the Budget also introduces notable social reforms, including the removal of the two-child benefit cap. These adjustments are likely to place additional cost pressures on employers, influencing hiring strategies, wage progression decisions and overall workforce investment.

A Tightening Labour Market: Rising Employer Costs

Labour has made no secret of its intention to raise revenue, and the most immediate impact for employers comes through increased employment-related costs. Higher taxation for top earners and adjustments to benefit structures introduce additional friction at senior levels, while businesses already navigating wage inflation now face further pressure.

These trends are likely to shape hiring behaviour in several ways:

• More selective headcount growth, especially in non-critical areas.

• Greater scrutiny of role value, with ROI becoming a more prominent consideration.

• A tilt toward interim and contract talent, allowing organisations to maintain capability without taking on long-term cost.

In short, the cost of employing people is rising - and businesses are responding predictably, seeking flexibility and delaying decisions where they can. There is, however, opportunity here for employers who stay ahead of the curve and understand where talent will become most competitive.

Where the Budget Does Drive Hiring: Energy, Water, Utilities & Defence

While cost pressures dominate the headlines, the Budget also directs meaningful investment into sectors deemed vital to the UK’s long-term competitiveness - many of which align closely with Murray McIntosh’s specialisms. These include Energy & Nuclear, Water & Utilities, Defence, and Manufacturing.

Across these industries, the message is consistent: the UK’s major infrastructure and strategic programmes are not slowing, and specialist talent will continue to command strong demand despite broader economic caution.

Hiring Headwinds: Confidence, Cost and Caution

Even with targeted investment, the wider hiring landscape remains mixed. Market reactions to the Budget - including volatility triggered by early OBR forecasts - reflect how sensitive confidence currently is.
Higher taxes and rising operating costs mean many organisations are likely to pause non-essential recruitment while economic conditions settle. This is most noticeable in commercial, operational and support functions outside core delivery.

Permanent hiring is likely to remain measured in the near term. Conversely, contract and interim resource - quicker to mobilise, easier to flex and lower-risk - will appeal to organisations that need to maintain progress without committing to long-term costs.

What This Means for Recruitment - and for Our Clients

The Budget reinforces the value of informed, sector-specific recruitment support. With talent shortages persisting in critical industries and hiring decisions carrying increasing financial weight, organisations benefit from advisers who combine market intelligence with genuine technical understanding.

For our clients, a few themes stand out:

• Clarity in workforce priorities is becoming essential. The organisations best placed to navigate cost pressures will be those with a firm grasp on the roles and skillsets that truly drive their performance.

• Specialist talent still holds leverage. In engineering-led sectors - from nuclear to water infrastructure - candidates continue to expect compelling career pathways, as well as competitive pay.

• Flexibility will be an advantage. Interim and project-based resource can help maintain delivery while keeping long-term commitments manageable.

• Competition for niche skills will intensify. Large-scale programmes in energy transition, defence and utilities will heighten demand for specialist talent, making early, informed recruitment decisions increasingly important.

Conclusion

Despite the pressures outlined in this Budget, the direction of travel for the UK’s strategic industries is clear - and full of opportunity for organisations that plan ahead. Demand for specialist talent will remain strong, competition will intensify, and the employers who act decisively will put themselves in the best position to grow. At Murray McIntosh, we continue to support clients navigating this shifting landscape with clarity, market insight and sector expertise, helping them build the capability they need to deliver, no matter the economic cycle.