Recruitment agency Robert Walters said there had been a softening of recruitment activity levels as the quarter progressed.

After benefiting from a staff shortage-driven jobs market, recruiters are now staring at challenging times as a bleak economic outlook and fears of recession are making employers more cautious about their hiring plans, it said.

CEO Robert Walters said: “The global macroeconomic backdrop became increasingly uncertain as the quarter progressed, resulting in a softening of recruitment activity levels across many of the group’s markets.”

The firm expects its full-year profit to be slightly below market expectations.

However, group net fee income for the full year rose 20%.

A report from Edinburgh-based recuiter Core-Asset Consulting says Scottish firms are competing for talent with higher paying London firms.

A review to be published this month shows that vacancies in Scotland rose 23% in 2022 compared to the previous year, while the number of applicants was down by 19%.

The time taken to fill a vacancy has also telescoped, with many firms forced to review and hike initial salary levels, forcing difficult conversations internally with existing staff on similar pay brackets.

Betsy Williamson, founder and chief executive of Core-Asset Consulting, said: “Winning the race for talent requires a deep understanding of what employees’ value.

“Flexibility is the name of the game, but as a basic benefit, not a nice to have. Flexible working is now the norm for many and organisations must reposition and reinvent themselves to compete effectively.

“Ultimately, businesses must be prepared to market themselves to candidates just as they would to potential customers – as candidates know their value and they know that many skills face a supply shortfall.”