U.K. Businesses Are Increasingly Pessimistic on the Nation’s Outlook

Almost two-thirds of British businesses say changes in the labor market will make the nation a less attractive place to invest over the next five years.

The findings, released as part of the Confederation of British Industry’s employment trends survey on Tuesday, highlight a growing pessimism about the U.K.’s outlook. The equivalent figures for 2016 and 2015 were 50 percent and 25 percent respectively.

That suggests the catalyst for the increased concern is last year’s Brexit vote, and the survey indeed showed worries were more pronounced among the U.K.’s biggest businesses, which tend to have a more international workforce.

The CBI said that uncertainty around the future relationship with the EU is hampering companies’ ability to find the right staff, and cited the skills gap as their biggest worry. With U.K. unemployment at a 42-year low, employers say that the already tight labor market can ill afford to lose skilled EU nationals.

The survey of 299 companies was carried out between Aug. 30 and October this year — before the latest breakthrough in Brexit talks. While the CBI welcomed that progress, it also highlighted the need to lock in guarantees for EU citizens that will hold even if talks break down next year.

Half of those surveyed also said Britain has become a less attractive destination for investment in the past five years, although there were still some sources of optimism in the CBI’s report.

Just over half of firms expect their workforce to grow in 2018, and 52 percent plan to raise pay for their employees by at least as much as the inflation rate, currently at 3.1 percent. Such increases would provide a boon for U.K. consumers who have seen their incomes squeezed by faster price gains in the wake of the Brexit vote.
Source: Bloomberg