The Brexit vote is already having a negative effect on the UK jobs market as recruitment company PageGroup said that its UK business declined in the third quarter of 2016, despite a rise in global profit.
Third quarter profits in the UK fell by 4.7% on last year, to £37.8 million ($46.45 million) in the three months to September 30.
The firm said that reflected the “continued uncertainty following the result of the UK referendum, particularly impacting our multi-national clients.”
In other words, multi-national companies are not hiring as many people as they usually do because the uncertainty over what kind of deal Britain will negotiate with the EU once it leaves the 28-nation bloc, is too vague. PageGroup’s results suggest Brexit is already having a measurable effect on jobs — and we have not even left yet.
Theresa May has refused to guarantee the rights of EU citizens to remain in the UK after the country leaves the European Union, and home secretary Amber Rudd has said she intends to cut immigration dramatically, so recruitment firms are having a tough time hiring from abroad at the moment. On top of that, the lack of clarity over whether Britain will stay within the Single Market could have a huge effect on a multi-national company and these types of firms are likely to be more cautious on investing in resources in the UK.
PageGroup also said that its financial services division in the UK had declined by 14%, although its technology division increased 22%.
The firm already announced in August that it would be cutting its UK staff, in a move that was interpreted as a worrying sign for the UK’s post-Brexit job prospects.
The firm reported a gross global profit of £158.6 million in the third quarter, which represents an increase of 14% from the same quarter in 2015. That was due to strong performance in central Europe and Latin America, which represents about half its business, and because of currency fluctuations.
In constant currency terms — when the effects of exchange rate fluctuations removed from the equation — the firm’s global profit was only 1.3%. It said other markets, like Brazil and China, were also experiencing tough trading conditions for recruitment.
Steve Ingham, PageGroup’s chief executive, said: “With the prevailing uncertainty in the UK, the challenges in some of our other larger markets and the unpredictable nature of the current cycle, we remain cautious in our short-term outlook.
“However, we will continue to progress our strategic projects, such as our European Shared Service Centre, as well as driving profitable growth and taking advantage of growth markets.”