UK job-loss risk

Britain could lose up to 250,000 jobs by mid-2027 if the economy tips into recession, according to a new forecast from EY Item Club. (aa.com.tr) The forecaster said UK gross domestic product is likely to flatline in the second and third quarters of 2026, leaving the country close to a technical recession, which means two straight quarters of shrinking output. It cut its 2026 growth forecast to 0.7% and said unemployment could rise to 5.8% by mid-2027. (independent.co.uk) That unemployment rate would mean more than 2 million people looking for work, with the forecast pointing to the labour market’s biggest hit since the pandemic. EY Item Club chief economic adviser Matt Swannell said higher energy costs, disrupted supply chains and weaker business investment were driving the downgrade. (independent.co.uk) The warning lands as Britain’s hiring market is already cooling. The Office for National Statistics said vacancies fell by 29,000 on the quarter to 711,000 in January to March 2026, the lowest level since February to April 2021. (ons.gov.uk) Vacancies were down in 13 of 18 sectors from the previous quarter and down by 65,000 from a year earlier. The Office for National Statistics also said there were 2.5 unemployed people for every vacancy in December 2025 to February 2026. (ons.gov.uk) A separate labour-market update from the Confederation of British Industry said firms were still cautious about hiring even after the unemployment rate unexpectedly edged down to 4.9% in the three months to February 2026. The group pointed to falling vacancies, weaker payroll numbers and a rise in economic inactivity. (cbi.org.uk) Business sentiment has also worsened. Deloitte said confidence among chief financial officers at major UK companies fell to a six-year low in its March 16-30 survey window, with cost control and cash preservation taking priority over hiring and capital spending. (deloitte.com) The broader growth picture has turned shakier this month. The International Monetary Fund cut its 2026 UK growth forecast to 0.8%, the sharpest downgrade among Group of Seven economies, while citing the war-related energy shock. (cnbc.com) That gloom followed a stronger patch in the official data. The Office for National Statistics said monthly gross domestic product grew 0.5% in February 2026, with services and production both up 0.5% and construction up 1.0%. (ons.gov.uk) The government has struck a very different tone. In its March 3 Spring Forecast, HM Treasury said inflation was falling, borrowing was down and the economy was set to grow, with Chancellor Rachel Reeves arguing her plan would make Britain “stronger and more secure” against shocks. (gov.uk) What happens next depends on whether weaker hiring turns into outright layoffs. For now, the clearest signal from the latest data is that employers are posting fewer jobs and large companies are preparing for a tougher year. (ons.gov.uk)