Unless training of indigenous skills improves and the government relaxes its immigration policies to enable companies to hire more talented foreigners, the UK’s economic growth will continue to suffer, said Adam Marshall, director-general of the BCC. He suggested scrapping the Tier 2 cap, which restricts the number of skilled, non-EU workers allowed to take jobs in the UK, would be a “swift and powerful statement of intent”.

UK skills shortage

The survey of more than 6,000 companies over the second quarter of the year found that economic conditions remained “sluggish”, despite a pick-up in manufacturing. This was more than offset, though, by a slowdown in consumer-facing industries, such as hospitality and retail, in the dominant services sector.“Amid growing international uncertainty, from escalating trade disputes to oil price rises, the UK economy continues to grow at a sluggish rate. Brexit is a key factor – but long-standing structural issues are also holding companies’ growth back,” said Mr Marshall.“The availability of skilled staff remains the biggest issue that firms face. Unless the government gets a handle on the disarray in the training and apprenticeship system and sets out a clear immigration policy that enables firms to cover vacancies, the economic potential of many areas across the UK will continue to be held back. Scrapping the harmful Tier 2 visa cap – which handicaps firms in every part of the UK – would be a swift and powerful statement of intent.“Business needs clarity on Brexit, and a strong domestic agenda that creates a ‘Brexit hedge’ as we navigate turbulence over the next few years. Big, bold action is needed for the UK to buck the current slow-growth trend – with major new incentives for business investment, confidence-boosting infrastructure projects, and a concerted effort to slash the up-front cost of doing business, which is putting consumer-facing businesses especially under intense pressure.”

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Related stories:

• The impact of the Tier 2 visa system
• Businesses welcome post-Brexit plan for EU nationals
• Brexit deal reached on EU expats in Britain

For more related news and features, visit our Immigration section.  

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UK economic remains sluggish

Suren Thiru, head of economics at BCC, added, “Our latest survey indicates that UK economic conditions remain subdued. While the modest pick-up in domestic activity points to a slight rebound in growth from a weak first quarter, there remains little evidence in the current data to suggest a sustained upturn in the UK’s economic growth prospects. “Activity in the key services sector remains moderate, with most of the main indicators still below their pre-EU referendum levels. While still high by historic standards, the easing in export sales in the manufacturing sector points to a tightening in trading conditions. With growth in key markets moderating and the impact of the post-EU referendum slump in sterling dissipating, the improvement in the UK’s trade position in Q1 may well be short lived. “The latest results also indicate that cost pressures eased markedly in the quarter, suggesting that inflation will drift downwards over the near term. Significantly, there remains very little evidence that above target inflation is translating to stronger pay settlements, with weak productivity and the high upfront cost of doing business continuing to limit the extent wages are able to rise.     “Against this backdrop, the Bank of England’s recent rhetoric around raising interest rates continues to look ill-judged. With the UK economy seemingly stuck on a low growth path and inflation easing, it would be prudent for the MPC (the Bank of England’s Monetary Policy Committee) to provide greater monetary stability rather than undermining the UK’s growth prospects further.”Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory 

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