
Commuters on London Bridge.
Shaun Curry | Afp | Getty Images
This report is from this week’s CNBC’s UK Exchange newsletter. Like what you see? You can subscribe here.
The dispatch
Despite the de-equitisation of the last decade, the U.K. stock market still offers plenty of choice for would-be investors in certain sectors, among them staffing, executive search and recruitment.
Many such players remain listed in London, although the likes of Norman Broadbent, RTC Group, Empresaria, Gattaca and Staffline are relatively small with market capitalizations of £60 million ($81 million) or less.
A quartet of larger players tend to dominate industry commentary. They include Robert Walters, a £95 million specialist in placing professionals, named after its founder.
Slightly bigger, valued at £209 million, is SThree, whose niche is the STEM (science, technology, engineering and mathematics) sectors. Another is PageGroup, valued at £769 million, which works across professions including accountancy and law.
Bigger still is Hays, valued at £925 million, probably the most diversified of the four in terms of its offering and global reach. It is best known for its work placing employees on a temporary basis — although four in 10 people it places are permanent recruits.
As an aside, it has the most interesting — and checkered — history, dating back to 1867 and the Hays Wharf warehouse on the south bank of the River Thames. It became one of the U.K.’s largest conglomerates after acquiring Farmhouse Securities, the country’s largest independent supplier of chilled and frozen foods, in 1981.
Farmhouse was led by Ronnie Frost, an ebullient entrepreneur who, having been a successful poultry trader at Smithfield (London’s world-famous wholesale meat market), self-deprecatingly described himself as a “chicken salesman.” He led a management buy-out of Hays from the Kuwait Investment Office in 1987 and made it a FTSE 100 giant with activities spanning distribution, document storage and mailing, as well as staffing.
After Frost’s retirement in 2001, with conglomerates having become deeply unfashionable, other parts of the company were sold and Hays became a focused staffing and recruitment business.
As such, it is a far smaller enterprise than it was, but nonetheless, its commentary will be eagerly scoured for clues on the state of the U.K. job market when it updates investors on recent trading this Friday.
Data drama
Such clues are presently scarcer due to questions over the quality of data supplied by the Office for National Statistics (ONS), which has been forced to delay publication of a number of key statistical updates, including inflation, trade and producer price data.
No single statistical release has been questioned quite as much as the Labour Force Survey (LFS), used to calculate the U.K.’s unemployment rate and inform the Bank of England’s Monetary Policy Committee (MPC) when it comes to setting interest rates.
Several members of the MPC have flagged unhappiness with the quality of the LFS data, among them Andrew Bailey, the Bank’s governor, who said in November last year: “It is a substantial problem and not just for monetary policy when we don’t know how many people are participating in the economy.”
The issues have been known about since October 2023, when the ONS suspended publication of the survey data, citing a sharp drop in responses following the pandemic.
The Financial Times earlier this year published internal emails from the period, including one from Richard Heys, the ONS’ deputy chief economist, in which he warned colleagues that the sample size for one aspect of the survey had “collapsed to only five individuals,” resulting in one data point moving by 30%.
A spokesperson for the Office for National Statistics told CNBC that it had been open and transparent about the issues, and a strategic plan was now in progress. “We are currently refocusing resources on our core economic outputs,” they said.
A long-term sickness?
The MPC is not the only body inconvenienced by the data quality issues. The Department of Health, for example, relies on the LFS for signals on how many people of working age are off sick and whether that is on a long-term or short-term basis.
That issue is also the cause of much agonizing in the Treasury. Although the U.K. claimant count (a measure of those claiming unemployment benefits) stood at 1.69 million in August this year, many millions more are economically inactive — some 21.1% of men and women of working age, according to the latest figures. The biggest cause of economic inactivity is ill-health. The Department for Work & Pensions reported in May this year that 90% of those on sickness benefits were still on them two years later.
It said in July that one in 10 people of working age are now claiming a sickness or disability benefit. Few return to the jobs market.
That is a shocking waste of human capital and, worryingly, the numbers appear to be rising; The Times newspaper reported last Friday that 5,000 Britons of working age were being moved onto long-term sickness benefits every working day, putting the U.K. on course to be spending £100 billion annually on such payments by the end of the decade.
While there is widespread suspicion that the system is being gamed — it is easy to find online guides and so-called “sickfluencers” advising on how to make a successful claim — the government was forced by its MPs to back down on modest cuts to such benefits earlier this year. Fiscal circumstances may force it to try again in the near future.
In the meantime, despite falling for 38 consecutive quarters, there are still an estimated 728,000 job vacancies in the economy, pointing to marked skill shortages in some fields. That helps explain why average earnings, excluding bonuses, are rising at 4.8% — making the MPC a tad uncomfortable.
That skills shortage may increase as the U.K. tightens its visa regime, while at the same time, many graduate entry-level jobs are vanishing due to the uptake of AI.
The U.K. jobs market has often confounded economists, never more so than after the global financial crisis, when unemployment stayed low as workers accepted lower earnings growth in return for job security.
It remains just as hard to interpret at present, which is why Hays and its peers will continue to attract disproportionate interest — and not just from investors.
Top TV picks on CNBC

AI cloud company Nscale has raised $433 million in new financing, just days after it announced a $1.1 billion series B funding round — the largest in European history. Karl Havard, CCO at Nscale, joined “Squawk Box Europe” to discuss.

Matt Miller, founder of Evantic Capital, touts the strengths of the U.K. as a tech startup destination, comparing it favorably to other cities around the world.

Aditi Venkatram, managing director at Jefferies, discusses the surge in European IPOs, private equity’s evolving exit strategies, and the growing influence of U.S. capital in European equity markets.
— Holly Ellyatt
Need to know
BYD’s UK sales soar 880%, making it the EV-maker’s largest market outside China. Chinese electric carmaker BYD sold 11,271 cars in the U.K. last month, the company said on Monday, representing mega year-on-year growth.
‘The system is rigged’: Founders and VCs weigh in on the UK’s ambition deficit. Young Brits are catching flak for their apparent lack of entrepreneurial drive, sparking a broader debate on whether the U.K. startup scene is facing a lack of ambition.
PRO: ‘Never been stronger’: Investors pile into UK stocks as next U.S.-alternative. The U.K.’s FTSE 100 gained 6.7% in the three months to the end of September, marking the London index’s second-best quarter in five years. Investors are paying attention.
— Holly Ellyatt
Quote of the week
London is a global city that has incredible talent, that is fed by a rich network of universities, and has had multiple successful winners [in AI startups]
— Matt Miller, founder of Evantic Capital
In the markets
The performance of the Financial Times Stock Exchange 100 Index over the past year.
London-listed stocks have risen over the past week, with the FTSE 100 adding around 1.4% since last Tuesday. The index touched a record high on Monday as stocks around the world charged higher, shrugging off concerns over the U.S. government shutdown.
Sterling gained 0.3% against the U.S. dollar over the course of the week amid dollar weakness, as investors eyed political developments across the Atlantic.
The yield on the benchmark 10-year gilt ticked higher on Tuesday, trading around 4.727%, up from 4.697% a week ago, as bond traders responded to political uncertainty following French Prime Minister Sébastien Lecornu’s resignation on Monday.
— Tasmin Lockwood