THE number of small and medium-sized UK businesses seeing opportunities to expand their workforces has fallen by one third since last June’s Brexit vote, and is at its lowest since April 2013, a survey shows.
Insurer Zurich, publishing the survey, observes the “dramatic” fall in the number of small and medium-sized enterprises (SMEs) seeing opportunities to increase their employee numbers comes amid concern about future UK immigration policy.
Only 14 per cent of SMEs now see opportunities to expand their workforces, according to the survey of more than 1,000 SME owners and decision-makers, down from 21 per cent before the Brexit vote.
Of SMEs with workforce concerns in the Zurich survey, 27 per cent cite the availability of skilled workers as a key problem.
Zurich says the survey findings signal a need for clarity following last week’s triggering of Article 50, which has begun the formal two-year EU exit negotiation process.
Since last April, SMEs in the finance and accounting, manufacturing, and information technology and telecoms sectors have seen particularly sharp falls in opportunities to increase their workforces.
Paul Tombs, head of SME proposition at Zurich, declared small and medium-sized business owners were “fearing the worst” when it came to their workforces.
He said: “Since Brexit, the number of businesses seeing the opportunity to expand their workforce is worryingly low, because there are no guarantees about the future availability of skilled labour. Businesses with smaller workforces are extremely susceptible to staffing and skills shortages, and a lack of clarity around work permits and movement of workers after Brexit is doing nothing to assuage these fears.”
He added: “There is a crisis looming in the UK, as employers gear up for a scramble to get and keep any skilled workers they can lay their hands on.”
Meanwhile, a separate survey published by KPMG shows the UK has lost ground in the accountancy firm’s annual rankings of both tax competitiveness and appeal as a destination for foreign direct investment (FDI), largely as a result of Brexit uncertainty.
This is based on the opinions of 100 of the largest UK-listed companies and foreign-owned subsidiaries, and 60 companies from across other Group of Seven leading industrialised nations.
Among the 60 non-UK companies surveyed, the UK fell from first to fifth place in the rankings.
KPMG flags “a clear divide in sentiment between UK versus non-UK businesses”.
The survey shows that, overall, the Republic of Ireland has, in the wake of the Brexit vote, overtaken the UK to become the country viewed as the most appealing destination for FDI.
KPMG says: “Non-domestic businesses cite particular sensitivity to disruptions in trade deals and tariffs, an end to the UK’s access to the single market, and the mobility of skilled labour as reasons for concern. This indicates the Brexit vote has raised questions about the UK’s overall appeal and the competitiveness of its tax regime versus other, comparatively more stable, European peers.”
KPMG adds: “Executives cite Brexit as having greatest impact on investments and activities in the next 12 months and suggest it could ultimately lead to substantial reductions in investment and high-value activities, such as capital expenditure, employment and R&D (research and development) investment.”
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