Falling economic confidence now affecting hiring decisions, says survey

Half of businesses report concerns about finding candidates to fill full-time positions in wake of ‘Brexit inertia’

Employer confidence dropped this month to its lowest level since 2016, according to a survey of businesses, with the prevailing uncertainty now affecting hiring decisions.

In its March Jobs Outlook report, the Recruitment and Employment Confederation (REC) said 41 per cent of respondents expected economic conditions to get worse, compared to 13 per cent who expected them to improve.

This marked a net drop in confidence of 8 per cent on last month, the lowest level since REC began polling in 2016.

The report, which surveyed 600 employers involved in business hiring, also found almost half (49 per cent) of respondents expressed concerns about the availability of permanent candidates, with engineering, technical and health and social care experiencing the greatest concern.

More than a third (35 per cent) of employers intending to hire temporary workers expressed concerns over the availability of agency workers with the required skills – with the construction sector expecting the largest crunch in this area – while almost half (47 per cent) of employers said they were using agency staff to manage uncertainty.

The survey was carried out between December 2018 and February 2019.

Neil Carberry, chief executive of REC, said that after weeks of “Brexit inertia” it should come as no surprise that hiring confidence was dropping.

“For months, businesses have told us they were concerned about the general outlook for the economy – it is clear to us that this concern is now closer to home,” he said.

“The extension to the Brexit deadline gives us some space to find a pragmatic deal that will give the UK’s businesses the certainty they need to invest and create jobs… but we cannot delay forever.

“It is in politicians’ power to make the weaker data we see today a blip. Our labour market is strong. Giving firms certainty about a future deal that supports trade, jobs and investment would get the UK back on track.”

Despite the concerns, the report found there was a rise in the number of employers looking to increase their permanent headcount in the future. “The fact that permanent hiring plans are still positive is a sign that the economy will deliver, if the fog of uncertainty is lifted from British business,” said Carberry.

The results come during a turbulent week in the Brexit process, which saw the UK’s leave date pushed until at least 22 May depending on whether backing for a withdrawal agreement can be secured ahead of a 12 April deadline.

Yesterday, MPs tabled a series of ‘indicative’ votes on hypothetical outcomes of the withdrawal negotiations, however while remaining in a customs union and holding a second referendum both received more support from MPs than prime minister Theresa May’s withdrawal deal did last week, neither garnered enough to secure a majority in the house.

May has pledged a third vote on her withdrawal agreement, despite procedural hurdles put up by the speaker of the commons, John Bercow, and has said she will stand down if the deal passes.