Recruitment plummets in services sector amid Brexit uncertainty

Recruitment by services firms who make up the bulk of the UK economy has fallen to its lowest level for 25 years, according to a new survey which shows the impact of economic uncertainty due to Brexit.

The survey of 5,600 businesses by the British Chambers of Commerce also shows that, of the firms in the sector that did try and recruit, the percentage experiencing difficulties rose to an all time high since the survey began in 1989.

Also, in the services sector, the percentage of firms reporting an increase in domestic and export sales and orders eased slightly in the quarter. The services sector accounted for 79% of UK GDP in 2013, according to the Office for National Statistics.

The BCC says that in the manufacturing sector the balance of firms reporting an increase in export sales and orders fell to their lowest in two years. The balance of manufacturers expecting their prices to increase also rose, with 81% citing the cost of raw materials as the driver of cost increases, the highest level for seven years.

In both sectors, the BCC says the balance of firms who looked to invest in either plant and machinery or training fell to their lowest level in over a year. Business confidence in turnover and profitability also weakened in the quarter.

Suren Thiru, BCC Head of Economics, said:“The sharp deterioration of the share of firms attempting to recruit is a concern and reflects both persistent hiring difficulties and heightened economic uncertainty – which if sustained could materially weaken jobs growth.”

Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), added: “While fewer companies are trying to recruit, those that are hiring they are finding it increasing challenging to fill vacancies. Many firms are deeply invested in developing homegrown skills and talent within their own communities. However, this alone is not enough to fill the skills gaps, at all levels, that businesses face right now, and which are set to get worse post-March 2019.

“The results from BCC’s latest survey support our call for government to drop arbitrary migration caps and targets, and work with business to develop an immigration policy that supports a growing economy. We should not be slamming the door on any of the skills we need for our companies to succeed.”

The survey shows the percentage of services sector firms looking to recruit fell from 60% to 47%, the lowest since Q1 1993. Of these, 72% reported difficulties – an all time high for the survey. In the manufacturing sector the percentage of firms attempting to recruit fell from 77% to 67%. Of these, 75% reported recruitment difficulties.

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