The Brexit vote has made businesses more pessimistic about their chances of success in the next 12 months and bosses have become less confident about hiring staff, two surveys show.
The comments come as economists register their concerns about the immediate prospects for the UK economy following the EU referendum, along with warnings that dire predictions might lead businesses to “batten down the hatches” and create a self-fulfilling prophecy of an economic slump.
The proportion of employers expecting to increase staffing levels over the next three months has fallen from 40% before the referendum to 36%, according to a study of more than 600 businesses published on Monday by the Chartered Institute of Personnel and Development (CIPD) and employment agency Adecco.
Meanwhile, a separate survey of 170 chief executives by accountants Grant Thornton found that 49% of respondents were less confident about the year ahead, while only 8% felt more confident. More than 20% are actively planning to decrease investment, while 56% remain unchanged in their investment decisions, Grant Thornton said.
Ian Brinkley, the acting chief economist at the CIPD, said: “There is clear evidence some employers have become more cautious about hiring following the vote to leave the EU. While many businesses are treating the immediate post-Brexit period as ‘business as usual’, and hiring intentions overall still remain positive, there are signs that some organisations, particularly in the private sector, are preparing to batten down the hatches.
“The economy had positive momentum going into the referendum and there is a risk that employers will create a self-fulfilling prophecy if they overreact in the expectation of a downturn. Instead of looking at cuts, now is the time to be talking about investment in people and in processes, and equipment that will boost productivity and improve the resilience of businesses and our economy.”
The comments come after the Bank of England cut interest rates earlier this month for the first time in more than seven years, to a record low of 0.25%, in a bigger-than-expected package of measures designed to prevent a post-Brexit vote recession.
The Bank signalled that rates would be reduced further in the coming months as the economic fallout from the decision to leave the EU becomes clearer.
Robert Hannah, the chief operating officer at Grant Thornton, said: “While much of the immediate political and economic turbulence following the outcome of the vote has settled over the past few weeks, the general outlook for the UK economy remains a top concern for most businesses.
“The Bank of England’s interest rate cut earlier this month will have been met with mixed reactions. Many businesses will be encouraged by lower borrowing rates and the stimulus package announced, whereas others will see the reciprocating impact of the fall in sterling hit their cost of imports and be discomfited by the BoE’s outlook on the UK economy.”
