Employers' confidence in economy 'falls to lowest level since EU referendum'

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Confidence in the economy among employers has fallen to the lowest level since the EU referendum, and the political climate is not helping, according to a new report.

Research by the Recruitment and Employment Confederation (Rec) showed that a third of employers believed economic conditions were getting worse.

Almost two out of five of the 600 employers surveyed said they expected to be hit by a shortage of temporary agency workers to fill vacancies, especially in the construction industry.

A worker inspecting rolls of steel
(Ben Birchall/PA)

Kevin Green, chief executive of Rec, said: "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."

A separate analysis found that small business confidence has plummeted to its lowest level since immediately after last year's Brexit vote.

The Federation of Small Businesses (FSB) small business index (SBI) of confidence stood at +1 for the third quarter of 2017, down from +15 in the second quarter and close to the -3 seen after the referendum.

FSB national chairman Mike Cherry called for help in the autumn Budget and a three-year Brexit transition deal.

He said: "Rising inflationary pressure and a weakening domestic economy are the twin drivers of plummeting confidence among small firms and consumers alike."

Shadow business secretary Rebecca Long-Bailey said: "This is a worrying signal.

"With the fiasco over business rate relief over the summer and lack of leadership on Brexit, the Conservative government is letting small businesses down."

A Government spokeswoman 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."