UK employers are losing confidence in the economy but are nonetheless looking to hire workers, a new survey has shown.
The balance of employers’ confidence in the UK economy stood at minus 26 in the three months to July, down one point from the February to April period, according to the latest jobs outlook survey from the Recruitment and Employment Confederation (REC).
The negative figure is close to its lowest post-Brexit point and means far more employers are pessimistic about the economy than are optimistic. Of the over 600 companies asked, 43 per cent thought the economy would get worse, while 17 per cent thought it would get better.
Despite this pessimism, firms’ demand for permanent staff increased in the May to July period. The balance of firms looking to hire stood at 19 compared to 16 in the previous rolling quarter.
The growing desire to take on workers comes despite falling business investment, a recession in the manufacturing sector and a trade slowdown due to Brexit uncertainty, trade tensions and slowing global growth.
Some economists have suggested that businesses could be hiring workers instead of investing during an uncertain period because new employees are cheaper in the short run and can be fired in a downturn.
Almost half of the surveyed firms expressed concern about finding enough suitable candidates to hire with unemployment at 45-year lows.
The government’s announcement that it will end the free movement of people instantly in the event of a no-deal Brexit could exacerbate the problem, the REC said.
“These skills shortages are especially acute in sectors like health and social care,” said Tom Hadley, director of policy and campaigns at the REC.
“With over 100,000 vacancies in the NHS and staff already working at full capacity, the government’s recent announcement on ending freedom of movement has come at the worst possible time.”
“EU workers are an integral part of our health and social care system and the UK workforce as a whole. It is essential that the government has in place a sensible transition towards an evidence-based immigration policy to help reassure employers and EU citizens.”