How the budget is going to affect graduate recruitment in 2026
The budget announced by Rachel Reeves on 26th November 2025 might have been the most anticipated budget in the last decade.
Sectors from construction and charity, to legal and logistics were all holding their breath for what the government would announce. Employers across Britain have long felt the pressure of high energy bills, numerous taxes, rising interest rates, and ever-increasing operating costs. Ask most CEOs and Founders and they’ll report the biggest costs they face is payroll. So, the impact of Rachel Reeves’ budget was always going to be a big deal.
Employees and graduate candidates feel it, too. The day-to-day cost of living, the housing crisis, and stretched public services means more and more pressure on securing the right job. Certain salaries or working in particular locations have become essential, rather than ‘nice to have’.
Understanding the complexities of employment in the UK today takes experience. In this blog, Cary Curtis, Give a Grad a Go CEO & Founder, reflects on the key announcements in the budget. Since 2009, Cary has led Give a Grad a Go to be the UK’s leading graduate recruitment agency. He outlines what employers, graduates, and the recruitment industry can expect in the coming months.
The 2025 budget summary:
2 key announcements which affect recruitment in 2026
Amid all the complex changes to property tax, ISAs, and public services, there are two main budget announcements to pay attention to. Both seem simple but they’ll both significantly impact employers and graduates as they navigate recruitment in 2026.
These are:
1. Income Tax, National Insurance, and Student Loan Threshold Freezes
- Personal Tax: Maintain the personal income tax and equivalent national insurance thresholds at current levels for a further three years until April 2031
- National Insurance: Maintain the secondary threshold for employer contributions at current level for a further three years until April 2031
- Student Loans: Freeze Plan 2 repayment threshold for three years from 6 April 2027
2. National Living Wage and National Minimum Wage increases
From 1 April 2026, the National Living Wage will increase by 4.1% to £12.71 per hour. The National Minimum Wage for 18–20-year-olds will also increase by 8.5% to £10.85 per hour and for 16–17-year-olds and apprentices by 6.0% to £8.00 per hour. The accommodation offset will increase by 4.1% to £11.10 per day.
How Tax & Threshold Freezes in the 2025 budget will affect employers
Despite salaries rising each year, especially for highly skilled careers or jobs which are in demand, employees are facing more financial pressure than ever before. The threshold freezes mean employees will need, or expect, higher starting salaries for entry roles. Employees who ready to move on from their entry- level positions will hit higher tax thresholds earlier in their careers.
Employers will also need to strategically use salaries to attract the best talent and to stand out from their competitors. It’s likely there will be more salary- negotiations as prospective employees become salary- sensitive.
What can employees do?
The most attractive employers will be those who consider how the salary they offer translates to take- home pay and how they transparently communicate that to prospective candidates.
If significantly raising salaries is not an option, creating genuinely useful employee benefit packages would be a game changer. Lifestyle perks such as voucher schemes, offsetting transport costs, and organised social groups, as well as career- boosting benefits such as training and flexible working could tip the balance for prospective employees to join the company.
The most valuable inclusions of employee benefits are family-friendly policies and competitive pension contribution, but there are low- cost rewards which have high impacts, such as giving employees’ their birthday off every year or providing free breakfasts for staff.
How can recruiters help employers?
At Give a Grad a Go, we can support employers now and throughout 2026 with advice and guidance as they recruit new employees.
- Our overview of graduate recruitment mean we know what employers and graduates are looking for
- We can emphasise the big picture of employee benefits beyond salary
- We transparently manage expectations and support with negotiations
- We match innovative companies with high-quality, diverse candidates
How Tax & Threshold Freezes in the 2025 budget will affect graduates
Graduates are significantly affected by the whole range of frozen thresholds in the 2025 budget.
Income Tax, National Insurance, and Student Loan payments are all deducted from graduate salaries, because they earn beyond the thresholds. Institute of Student Employers (ISE) research indicates that the average graduate salary in the UK is £36,335.
As well as this, graduates seeking employment face wider cost-of- living pressures, including relocation fees, high transport fees and rental costs as landlords pass on increases to their tenants. For London grads, where Trust for London estimates a £47,000 salary is needed for a decent standard of living, this challenge is even more difficult.
Graduates looking for new roles will have to carefully consider affordability and make adjustments to their plans, such as staying in their home towns to live with parents, rather than relocating.
What can graduate candidates do?
Candidates should zero in on what their minimum salary has to be, as well as what their ideal employee packages might look like. There are many ways employee benefits could make a huge difference to their career and lifestyle, such as:
- Training and development opportunities offered by the company, which would help boost their career
- Benefits which would be helpful for them right now, like transport vouchers, flexible working, or wellbeing support
- Benefits which would be helpful in the future plans, like the company’s family- friendly policies and pension contributions
Being clear on what you’re looking for means it’s much easier to identify one company over another and find your ideal employer.
How can recruiters help graduate candidates?
We pride ourselves at Give a Grad a Go with the level of support we give our candidates to find the best roles for them
- We get to know candidates really well to match them with the salary and employee packages they want
- We give advice around career planning and pathway planning
- We support with salary negotiations, contract negotiations, and onboarding.
How Minimum Wage Rise in the 2025 budget will affect employers
Every business with employees will be affected by the rise in minimum wages.
While roles in hospitality and retail might be the first ones which come to mind when considering National Minimum Wage, there are many graduate schemes with salaries which hover near the full-time annual National Minimum Wage of £25,000.
Employers, firstly, must fund the rise in wages, finding an extra £1,500- a- year for full-time employees under 21, and an extra £900- per- year for employees over 21. Then, employers must examine salaries across the workforce. If an employee’s salary is affected by unpaid overtime, salary sacrifice schemes, pension contributions, or any other deductions which could tip the salary below the National Minimum Wage, the employer must address this.
What can employers do?
Employers legally must meet the National Minimum Wage expectations.
Absorbing the cost of this could be a challenge for some businesses. In this case, finding cost efficiencies will be essential. Reassessing roles, restructuring, combining roles, or offering reduced hours are all viable options. Alternatively, outsourcing roles or departments (such as HR, marketing, or recruitment) can save considerable costs.
Businesses which are transparent about salaries, especially in light of cost-of-living pressures, will attract more candidates and retain more staff.
How can recruiters help employers?
If your business is planning on restructuring or creating new roles, streamlining the recruitment processes will save more money and more time. At Give a Grad a Go, our team can:
- Manage the entire recruitment process, including overseeing the shortlisting process fairly, assessing candidates, managing contract negotiations, and supporting throughout the onboarding processes
- Provide dedicated support, advice, and resources from your case manager
- Advertise your jobs on curated promotional platforms to get your roles seen by your ideal candidates
- Recruiters can emphasise employee benefit packages, as well as progression and development opportunities, over salary
How Minimum Wage Rise in the 2025 budget will affect graduates
As the National Minimum Wage increases across the country, employees will see an increase in their wages. While the increase may not make a significant impact in the wider cost- of- living pressures, earning between £900- £1200 more per year is certainly going to help. Graduates and professionals are weighing every pound more carefully and any increase in salary can make a new role or a new company more attractive.
If there are any negative consequences from this budget announcement, it’ll depend on a business-by-business case. There may be some difficulty in absorbing these costs, and some businesses may have to explore restructuring or redundancies.
What can graduate candidates do?
Employers legally must meet the National Minimum Wage expectations.
If you are currently employed, and your salary is close to the National Minimum Wage threshold, it’s a good idea to discuss your salary with your employer. Any overtime you do, shifting hourly rates due to different shift times, pension deductions, or salary deductions could inadvertently make your salary below the National Minimum Wage. They will need to rectify this.
You may find yourself facing redundancy, reduced hours, or considering moving to a new company if there are restructures at your current job. While this is a stressful event, don’t worry. The team at Give a Grad a Go are on your side and ready to help you find your new role.
How can recruiters help graduate candidates?
We’re always here to help you with your next career step.
- We have partnerships with some of the biggest, most innovative companies in the UK
- We offer career advice, CV support, interview guides, and a dedicated jobs board
- You’ll get holistic support throughout your job search, from constructive feedback to salary negotiations
What happens next?
While no one can predict exactly what will happen in 2026, you won’t have to deal with it solo. The Give a Grad a Go team are to make your recruitment journey as fast, easy, and successful as possible. Let us do the heavy lifting.
More advice for employers
More advice for candidates
Speak to our experts about support you in 2026
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