One in five UK firms will slash recruitment in the event of a no-deal Brexit

Experts warn of impact ‘across the board’ if government fails to reach an agreement

A fifth of UK firms will cut recruitment in the event of a no-deal Brexit, a survey has found, with experts warning a clear government immigration policy will be ‘critical’ for the future. 

The research, conducted by the British Chambers of Commerce (BCC) in partnership with Bibby Financial Services, found 18 per cent of the 2,500 respondents would cut recruitment if the UK left the EU without a deal, while 21 per cent said they would reduce investment in their business. 

Commenting on the findings, Gerwyn Davies, senior labour market analyst at the CIPD, said the survey flagged the sensitivity of employer needs in a post-Brexit environment.

“The BCC research is consistent with other employer surveys, which all illustrate how sensitive employers’ recruitment and investment intentions are to Brexit-related developments,” he told People Management.  

“The outcome of the government’s post-Brexit immigration policy, including the need for some form of low-skilled route, and the UK’s future trading relationship with the EU will be critical factors in determining employers’ decisions around relocation, investment and hiring.”

Dr Adam Marshall, director-general of the British Chambers of Commerce (BCC) added the findings were a wake-up call for businesses, and called on the government to urgently achieve a comprehensive deal. “Our evidence is clear – failure to reach a political agreement would have real-world consequences, with significant decreases in both investment and recruitment,” he said. 

“Larger firms and those active in international trade would suffer the most from a disorderly and sudden exit from the EU, but there will be impacts across the board.” 

Alan Price, employment law director at Peninsula Group, told People Management the impact of a no-deal could see businesses losing talent at a testing time for the economy, with a fifth (20 per cent) of survey respondents saying they might move part of their organisations to another country within the EU27 following a no-deal scenario. 

“The ramifications on the economy – and the UK workforce itself – could be significant if businesses are forced to take their operations overseas,” he said. “When times are uncertain, employers look to secure their financial position in any way they can and if this means cutting down on recruitment, they will need to look at other ways of retaining their current staff and ensuring skills gaps are filled if they do lose top talent.” 

The survey also revealed almost two-thirds (62 per cent) of UK firms had not conducted a risk assessment of the impact Brexit could have on their business, with widespread uncertainty persisting. 

“Too many businesses across the UK are still not ready for Brexit. Many smaller firms don’t have the capacity to scenario plan, don’t think they’ll be affected, or have simply switched off from the process altogether,” Marshall warned. 

“With so much still unclear, a transition period is vital to allow all firms the time to acknowledge and prepare for change.”

Chancellor Philip Hammond today said the UK economy would be able to withstand a no-deal Brexit, but added this “would not be a good outcome,” regardless of fiscal capacity.