Reset Review: 2025 Spring Budget vs Recruitment and the Financial Services Sector

The Spring Statement, shared with us on the 26th March, introduces several fiscal measures that will no doubt impact multiple sectors, but notably recruitment and financial services.

The Reset team have researched the impact the budget is likely to have on our own industry as well as our clients in the financial services industry and we have a few concerns as well as some relief.

Here we’ll be outlining the key points of the budget that we believe will be causing an impact, be that good or bad.

Employer National Insurance Contributions (NICs) Increase

A significant change is the rise in employer NICs. The threshold has been lowered to £5,000 rather than £9,100, and the rate has gone from 13.8% to 15% - changes that are projected to add £25 billion to employer costs.

For us as recruiters, this increase in the cost of hiring may squeeze margins and influence hiring decisions.

We may well see a shift towards temporary hires and freelance or overseas outsourcing.

Financial services firms may face heightened operational expenses, possibly leading to adjustments in workforce strategies to mitigate the financial impact. ​ 

National Living Wage Adjustment

The National Living Wage is also being increased. Workers aged 21 or above will now be entitled to £12.21 per hour, a 6.7% increase. The increase for 18-20 year olds is 16.3% (£10 per hour), and 16-17 year olds and apprentices will receive an 18% increase (£7.55).

This further increase in labour costs will of course enhance the earning for lower-paid workers, but will put employers under significant strain once more.

For recruiters, payroll expense increases will affect their work with various sectors who require substantial minimum wage workforces.

Financial service organisations may not fee the effect in that way, but they may well see more demand for higher wages across the business as expectations shift in tandem with the increases.

Economic Growth and Inflation Outlook

Surprisingly, the budget suggests an optimistic trajectory for the UK’s economy in general.

The Office for Budget Responsibility (OBR) currently forecasts a growth in GDP (Gross Domestic Product) of:

• 1.9% in 2026

• 1.8% in 2027

• 1.7% in 2028

Public sector expenses are expected to come down to 82.7% of GDP over the next 5 years, and inflation is due to fall in line with the Bank of England’s target of 2% by 2027.

If these expectations become a reality, the economy should quickly stabilise and create a far more friendly environment for all businesses to grow and develop.

Interest Rate Adjustments

The Bank of England has reduced the base rate (the rate that the Bank of England charges banks and financial institutions for loans with a maturity of 1 day) to 4.5%. The base rate is reduced to help the economy by lowering the cost of borrowing and to encourage investment.

For the financial services sector, this adjustment could lead to increased lending activities and a more dynamic market environment. This could lead to an increase in recruitment to capitalise on the lower interest rate and expand workforces.

Market Confidence and Employment Trends

As of February 2025, the UK had the fastest month-on-month growth in job vacancies in three years. This suggests a healthy demand for recruitment services and a potentially expanding client base for financial services firms.

Let’s hope this trend continues well into Q2 of 2025 despite the increased costs for taking on employees.

Our concern is that this uptick shows an increase in activity ahead of the budget, with firms aware of the challenges on the horizon.

Conclusion

The 2025 Spring Budget introduces measures that present challenges and opportunities for the recruitment and financial services sectors. While increased NICs and wage adjustments may increase operational costs, projections of economic growth, controlled inflation, and favourable interest rates offer a promising outlook.

The cost of employment will increase for us as a business and may have an effect on the habits of our clientele, but we also know that we offer a cost-effective service. Our placements are always rooted in longevity - providing a perfect fit for our clients and candidates alike.

For our clients in the financial services industry, strategy will be key, as will working with the right recruiter to make sure that your budget is well-spent and your payroll costs remain an effective investment.