Recruitment companies have warned about declining confidence across Europe and the UK, as political uncertainty adds to concerns about economic growth.
The FTSE 250 recruiter PageGroup said on Monday that profits had dropped by nearly a quarter in Germany and 17% in France during the last three months of 2024, compared with the same period in 2023. Its UK profits fell by 14%, as companies grew more nervous about taking on new staff.
Morgan McKinley, another British recruiter, said the number of job openings in London’s financial services sector dropped by 12% year on year in the final quarter of 2024.
The recruiters’ gloom will add to concerns about the prospects for the economies of the eurozone, and the UK.
Europe’s largest economies are struggling with faltering growth. Germany, the EU’s largest economy, has oscillated between growth and contraction every quarter for the last two years, while narrowly avoiding a technical recession. The economic struggles contributed to the collapse of the three-way “traffic light” coalition and an early election next month.
France is also going through a period of political instability, with the centrist prime, minister François Bayrou, trying to lead the country’s fourth government of the last 12 months.
The UK government under Labour’s Keir Starmer is also struggling to make an impact after six months in charge. It is trying to work out how to respond to an increase in government bond yields and a decline in the value of the pound prompted by the election of Donald Trump and the possibility of steep tariffs.
PageGroup said that “a high degree of macroeconomic and geopolitical uncertainty remains across the majority of our markets, notably in France and Germany”.
The European Central Bank (ECB) is preparing to cut interest rates this year. However, the ECB’s chief economist, Philip Lane, said the central bank needed to find a “middle path” of rate cuts to support the economy, but not going too fast and stimulating further inflation.
“What we will have to work out this year is the middle path of being neither too aggressive nor too cautious in our actions,” Lane said, in an interview with Austrian newspaper Der Standard published on Monday.
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Mark Astbury, a director at Morgan McKinley, said his data showed a “sobering picture of an industry grappling with mounting challenges, including economic volatility, geopolitical uncertainty, strategic overhauls, and the rapid pace of technological disruption”.
Nicholas Kirk, the PageGroup chief executive, said: “Market conditions remained challenging in the fourth quarter and while most markets were sequentially stable, we experienced a further worsening in Europe, particularly in our two largest markets, France and Germany.
“The conversion of interviews to accepted offers remains the most significant area of challenge as the ongoing macroeconomic uncertainty continues to impact candidate and client confidence, also extending the time to hire.”
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