The UK’s skills gap is narrowing for first time in 10 years, with new figures suggesting it has passed its peak.

ManpowerGroup’s 2025 Talent Shortage Survey revealed a reduction in the number of organisations facing skills shortages this year, dropping from 80% to 76%.

However, its UK managing director Michael Stull urged caution when predicting what the findings could mean for productivity and the future of British business, particularly in light of increasing inflation and soaring employer costs following the chancellor’s latest Budget announcement.

He said: “The significant drop in the UK talent shortage could mean we’re over the peak of the skills gap which has intensified over the past decade since its last drop in 2014. Organisations have worked hard during this time to drive positive change amidst major challenges; by upskilling, reskilling, seeking out new talent pools and through smarter use of technology.

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“Although any movement towards closing the skills gap is positive, we must bear in mind that many other indicators point to a hiring recession. There are fewer jobs out there and this is playing a role in slowing the demand for skills.”

Stull insisted that employers and government should continue to concentrate on measures that will boost UK productivity to pull businesses out of the current hiring recession and away from a potential economic recession.

He added: “Now is the time for a smart response that doesn’t rest on improvements already made.”

The percentage-point drop brings the UK closer to the 74% global average, which remains unchanged this year.

To overcome talent shortages, employers are taking action such as upskilling and reskilling current employees, cited by 28% of respondents, while nearly one in four (23%) are growing talent pools and more than one in five (21%) are raising wages (21%). Just 14% are increasing temporary recruitment.

The research also highlighted how organisations’ needs have shifted in the past 10 years, with demand for IT and data skills moving from eighth place in 2014 to first place in 2025.

It showed an increase in the need for customer-facing and office support workers, with engineering skills remaining high in demand.

Stull added: “While the UK macro circumstances remain challenging, any closing of the skills gap should be seen as a sign of green shoots for improving productivity. But we can’t rest where we are and must continue to invest in training and development, preparing thoroughly for further changes in workplace legislation, and adapting recruitment practices without compromising on longer-term goals.”

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