Growing numbers of British companies are preparing to cut jobs or put hiring plans on hold as Brexit uncertainty intensifies, in the latest sign of stress on the economy.
In an indication that Britain’s long jobs recovery since the financial crisis is gradually running out of steam as Brexit nears, IHS Markit said UK employers’ staff-hiring intentions had reached a six-year low in February.
A separate survey of more than 2,000 firms by the employment agency ManpowerGroup found that growing numbers of companies were preparing to cut jobs across the country.
IHS Markit’s poll of employers across nine different industry sectors, which the Bank of England and the government use as an early warning indicator, said companies in finance and business services, which account for nearly a fifth of British workers, were among those preparing to make redundancies.
A net balance of 4% of companies across all sectors were planning to increase staff levels in the second quarter of 2019.
The gloomy readings come after official figures showed that the British economy created almost 500,000 new jobs last year, as employment hit a fresh record high and unemployment dropped to the lowest level since the mid-1970s.
The strength of the jobs market has taken some analysts aback, given the risks facing the British economy from Brexit. Some economists believe that firms have chosen to hire workers rather than make investments in technology and productivity-boosting equipment. The latest snapshots, however, suggest the trend may have run its course.
Increasing numbers of firms, particularly in manufacturing and retail, have announced job losses in recent months, primarily associated with shifting demands from consumers and changing global trends, but analysts have also blamed Brexit as a key risk.
James Hick, the managing director of ManpowerGroup Enterprise, said: “Against a bleak backdrop of low economic growth and Brexit uncertainty, UK employers have bucked the trend and kept on hiring. However, this quarter we are seeing signs that the good times are coming to an end as several sectors have turned negative.”
IHS Markit said UK business confidence had dropped to its lowest ebb since the last recession in 2009, with the lack of clarity about Brexit a widespread concern.
Tim Moore, an associate director at IHS Markit, said: “Survey respondents also cited domestic political uncertainty as the key factor holding back profits expectations, staff hiring and business investment.”