Employment growth in UK small businesses has slowed significantly, with year-on-year growth falling from 7.8% in December 2024 to just 2.5% in December 2025 according to new data from Employment Hero.
The latest Jobs Report, based on real-time data from over 115,000 employee records within small businesses, reveals that the traditional December seasonal hiring surge failed to materialise, with employment rising only 0.5% month-on-month - the lowest monthly increase observed since April 2025.
The muted growth suggests small businesses remain cautious following the October 2025 Autumn Budget, which many felt did little to support them. Retail and hospitality sectors were particularly affected, with employment actually contracting by 2% in December, opposing the expected seasonal spike when employers typically take on extra staff to meet heightened consumer demand.
Employment Hero has been tracking these trends throughout 2025, revealing the real-world impact of the Autumn Budget and subsequent employment law updates. Small businesses responded immediately to these changes, with a sharp monthly employment decline of -1.1% recorded in April 2025, setting off a chain of events that shaped employment patterns for the rest of the year.
Kevin Fitzgerald, UK Managing Director at Employment Hero, said: "We've been tracking employment trends across the UK for a full year and the data makes clear the real-world impact that policy has on small businesses. Our latest figures show that,...
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