The UK jobs market is facing significant turmoil, with rising unemployment figures and an increasing frequency of layoffs. This trend is particularly pronounced in the professional services sector, where many attribute the changes to the rapid advancement of AI.
As a result, the anxiety level is mounting among the junior end of the workforce.
Last month, James Reed, CEO of Reed Recruitment, wrote for City AM, claiming it is the worst jobs market he has ever seen. This comes as the Office for National Statistics (ONS) revealed that the unemployment rate has now risen to 4.7 per cent, the highest in four years.
Many businesses have conducted, in some cases, multiple rounds of layoffs. No more is this evident than at the Big Four accountancy giants, who over the past two years have cut over 2,000 roles between the four firms.
There are several reasons for these cuts, including over-hiring during the pandemic. But one major, and developing, reason is that the firms have been investing a significant amount of money in AI.
These cuts are not set to slow down anytime soon, with the Big Four also set to slash graduate recruitment as AI begins to replace some junior roles.
Speaking on this last month, James O’Dowd of executive search firm Patrick Morgan said: “The Big Four are looking at AI very seriously to replicate junior work more cost-effectively.”
Steve Kelly, vice-president of method and content at software company Orgvue, said: “Although AI is not impacting workforce dynamics as much as we may think, it is reducing graduate opportunities, particularly in professional services.”
The consultancy section of the broader professional services industry is not the only business experiencing this as job openings at insurance firms have been declining.
The new data from Avencia and Vacancysoft revealed that vacancies in the UK insurance sector decreased by over 17 per cent in 2025. The data indicated that firms were focusing on digitisation, as IT roles increased by 14 per cent within the sector.
The Avencia and Vacancysoft report noted “insurers are cutting back on legacy operations while stepping up digital investment.”
This comes on the back of the news last month that German insurance giant Allianz will be cutting 650 UK jobs across several lines of its business. At the time of the news, a spokesperson for Allianz said: “We are acting in response to shifting preferences towards digital, self-service customer support and changing market dynamics in claims.”
Greg Nieuwenhuys, senior partner at Generative AI Strategy, told Eyes on the Law in May that AI is poised to transform the legal job landscape. His comments followed the regulatory approval of their first official AI-driven law firm.
Graduates on edge
As layoffs at well-known firms catch the headlines, those who are sitting in their final months at University, seeking graduate schemes, are facing anxieties about what their future looks like.
According to a survey by global research firm Yugo, 78 per cent of students in the UK fear that AI could render human workers redundant. The survey highlights that while Gen Z is an early adopter of AI tools to support study and productivity, many are worried about long-term employment opportunities.
Dominic Wellington, AI and data expert at SnapLogic, warned: “AI should be an accelerator for graduate schemes in professional services organisations, not a brake.”
“When implemented well, AI agents allow junior talent to offload repetitive and administrative tasks, traditionally assigned to interns or new hires, and instead focus on impactful, client-facing work,” he added.
However, the consultancy sector is struggling with a pricing problem as a result of other businesses embedding AI. This is having a knock-on effect on its profitability problem, which it is currently trying to solve.
The insurance sector is seeing easy cuts following investing in technology that can reduce staff load, especially on the claims side. An Allianz Research survey from last year found that 46 per cent of respondents believe AI will make employees more efficient, potentially leading to job cuts in the insurance sector.
Kelly stated: “Robots coming for our jobs has been a constant narrative for over 20 years, but for all the hype, business performance is still attributable to the human workforce.”
“FTSE companies that increased their workforces in 2023 and 2024 delivered 17 per cent revenue growth over these years. By contrast, companies that cut their workforces saw revenues fall by 5 per cent. Evidently, rather than removing people, businesses thrive when high-quality human capital investments are made, because real progress still depends on human performance,” he added.