Companies within some of the most important areas of Britain’s economy are already struggling to find and afford new staff and Brexit will make it worse, according to the
British Chambers of Commerce (BCC).
The business lobby group surveyed
7,300 businesses in the manufacturing and services sectors.
The results showed that while figures indicated that both sectors saw continued expansion, they faced “high levels of recruitment difficulties.”
The report showed that 74% of manufacturing firms were struggling to find staff while 58% of services firms said the same thing.
Suren Thiru, Head of Economics at the BCC, said in a statement that while things seem OK right now, in the medium and longer term, the sectors face a number of huge issues that need to be addressed if they are able to expand (emphasis ours):
“The services sector continues to rebound from its initial shock in the months immediately after the EU referendum, and while growth has not yet returned to historic levels, it remains a key driver of the UK economy.
“Manufacturers’ export sales are at their highest levels in recent years, with the decline in Sterling and an improving outlook for the global economy helping a number of firms who export. However, if the sector is to sustain this growth in the long-term, there must be action on the difficulties facing it, including chronic underinvestment in the UK’s infrastructure and shortages in the labour market.
“Inflation is a key risk to the UK’s growth prospects, with businesses having to manage rising costs and the pressure to raise their prices. If higher inflation squeezes consumer spending as we expect, the current strength in business activity may not be enough to prevent a period of more muted economic growth.”
Prime Minister May is taking Britain towards a “hard Brexit” — shorthand for Britain leaving the European Union without access to the Single Market in exchange for having full control over immigration into the country.
However, if the government does heavily restrict EU migration, several industries vital to the UK economy could be hit with massive worker shortages. This would hurt the consumer, as it could cause either shortages or price rises. So therefore this will only exacerbate the existing issues hitting manufacturing and services.
For instance, Britain’s service industry accounts for nearly 80% of total UK GDP and IPPR illustrated across two charts how the bulk of the service sector relies on EU workers and low-skilled EU migrants to fill jobs.
On top of that, while Britain will not leave the EU until March 29, 2019, there is great uncertainty over how the the deal will shape up and how long companies will be prepared for the change.
More from Business Insider UK:
- The euro is going to parity with the dollar whether Le Pen wins or not
- 10 things you need to know in markets today
- REPORT: The US intercepted communications that preceded Syria’s chemical-weapons attack
- GOP lawmaker says Sean Spicer should quit: ‘I just don’t think he serves the president well’
- North Korea is said to be on the verge of another nuclear test
Business Insider Emails & Alerts
Site highlights each day to your inbox.