The recent survey from Cips, The Chartered institute of Procurement and Supply for the services industry, which accounts for 80% of the UK’s economic output, and IHS Markit, show that the UK’s services sector is finding it increasingly hard to secure enough workers following falling numbers of skilled applicants as we prepare to leave the EU.
The survey suggests that companies are being held back by the labour shortage.
Official figures last month showed a record annual decline in migrants coming from the EU. Economists say this will act to reduce the number of applicants available to companies.
Experts are growing increasingly concerned for the future of economic growth and say labour shortages could drive up wages as people will have increased bargaining power. This could lead to companies deciding to cut their workforce.
According to the survey, there were widespread reports that tightness in labour market conditions had constrained employment growth. The figures follow a drop in the UK unemployment rate to 4% in the three months to June – its lowest level since the winter of 1974-75 – further reducing the number of people available to work.
Jeremy Thomson-Cook, the chief economist at WorldFirst, said the survey data followed several other poor readings for economic growth. “Another day, another survey showing Brexit uncertainty weighing on a part of the UK economy,” he said.
The survey of services companies – including transport and communications firms, banks, hotels and restaurants – found optimism for the year ahead had dropped to the lowest level since March.
Chris Williamson, the chief business economist at IHS Markit, said the drop in confidence was to the lowest levels seen since the EU referendum. “[This is] largely reflecting increased anxiety over Brexit negotiations,” he said.