The latest survey from the Recruitment & Employment Confederation (REF) has revealed that business confidence in the future of the economy is at its lowest since the EU referendum.Employers are also expressing concern over their future ability to find the staff they need in an era of record high employment across the country and a shrinking pool of workers arriving from the rest of the European Union.

Are economic conditions deteriorating?

The REC findings on Wednesday were mirrored in a survey by the Federation of Small Businesses (FSB) whose index of confidence stood at +1 for the third quarter of 2017, down from +15 in the second quarter and close to the -3 recorded after the referendum.According to the REC report, based on a survey of 600 companies, a third of employers believed economic conditions were getting worse, compared to 26 per cent who felt they were getting better. Despite this, there was a positive balance of 10 per cent in the number expressing confidence in future hiring and investment decisions.Kevin Green, REC chief executive, commented, “Employers are showing a great deal of resilience as they continue to hire despite a growing number losing faith in the direction the economy is heading. The political climate isn’t helping the situation. Businesses need clarity in order to plan effectively and so far the Brexit negotiations have not resolved any of the core issues. “Employers are worried about how they will fill vacancies in the future. There are now just 1.9 unemployed people for every vacancy, and net migration from the EU is falling, which means the pool of people available to employers is shrinking. “Businesses can only grow if they have access to the people and skills they need. With party conference season in full swing, we urge politicians of all sides to heed the warning signs and create clarity for business. That means making progress in the ongoing Brexit negotiations.“An early agreement on the settlement of EU nationals already working in the UK would be a step in the right direction. The vast majority of EU nationals residing in the UK come here to work and make a valuable contribution to our economy.” 

Rising inflation and a weak economy

Mike Cherry, FSB National Chairman, said, “Rising inflationary pressure and a weakening domestic economy are the twin drivers of plummeting confidence among small firms and consumers alike. With conference season and the Autumn Budget approaching, policymakers have an opportunity to restore optimism.“A record proportion of business owners currently expect to downsize, sell or shut up shop, while rent and taxation are frequently mentioned as causes of increased costs. We need to see more support in this space – that includes ending enforcement of the ridiculous ‘staircase tax’. “Small firms will be looking to the Chancellor to extend a lifeline at the Budget. In such a difficult trading environment, any new tax grabs or loss of reliefs for entrepreneurs would exacerbate existing challenges.”

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Related news:

• Deutsche Bank warns of post-Brexit labour 'shock'
• Official figures confirm exodus of EU workers from UK
• UK approaching labour shortage for STEM related jobs

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A government spokesman said, "The economy has grown continuously for more than four years, the deficit is down, the UK is home to a record 5.5 million small businesses, and a record number of people are in work. We are proud of this, but not complacent."We know that businesses are asking to be given as much certainty as possible as we move through the exit process from the European Union, which is why we are intensifying our engagement with the business community to ensure their voice is heard and reflected throughout our negotiations.”For related news and features, visit our Brexit section.Access hundreds of global services and suppliers in our Online Directory  Get access to our free Global Mobility Toolkit

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