Plunge in hiring by small firms 'to cost economy £6.1bn a year' as Brexit weighs
Hiring among small businesses looks set to tumble by 2022 as Brexit uncertainty takes its toll, costing the economy more than £6 billion a year.
A quarterly health check of small and medium-sized businesses, compiled by lender CYBG and the Centre for Economics and Business Research (Cebr), signals the average number of workers taken on each year will plunge between 2017 and 2022.
It estimates the sharp pull back in SME hiring could cost the UK economy dear, seeing the annual contribution to the UK's gross value added (GVA) figure fall to just £4.8 billion.
This compares with around £10.9 billion added each year to the UK economy between 2010 and 2017, according to the report.
Gavin Opperman, group customer banking director at CYBG, said the figures were a "wake-up call".
He said: "SME contribution cannot be underestimated.
"We must understand the pressures facing them and provide the right environment and support to help them flourish and continue being a major employer of the UK's workforce.
"In particular, we must give our small firms the access to talent they need post-Brexit and address how these firms can be incentivised to invest in skills."
The SME sector currently employs around 16.1 million people, roughly 60% of the UK's total private sector employment, according to the report.
A further survey of SMEs by CYBG on hiring plans for the rest of 2018 found that 9% of firms are expecting to cut the size of their workforce over the next six months, while 6% fewer SMEs are now planning to expand their workforce than the 58% who increased the size of their workforce over the past six months.
Firms said a worsening outlook for the UK economy was a large factor behind the reluctance to hire, as well as rising employee costs and a reduced availability of skilled workers.
But the latest SME health check index also offered some cheer, with signs that the sector's overall health is improving, with a reading for the first quarter of 2018 increasing by 3.4 points to 47.4 and ending five consecutive quarters of decline.
Mr Opperman said the report "does show signs of optimism".
"However, it's still a mixed picture and the Index is well below the level we have seen previously," he added.