Employers' Confidence in U.K. Economy Slips as Brexit Nears
Employers' Confidence in U.K. Economy Nosedives as Brexit Nears
(Bloomberg) -- U.K. employers’ economic confidence is weakening as the nation prepares to leave the European Union.
The net balance of employers with a positive outlook for the economy fell to the lowest since February, the the Recruitment and Employment Confederation said Wednesday. However, the confidence of employers to make hiring and investment decisions remained positive during the three months ended Sept. 30.
Prime Minister Theresa May is inching closer to a Brexit deal before the planned divorce on March 29, though it’s not clear lawmakers at home will agree to whatever she brings back from Brussels. Chancellor of the Exchequer Philip Hammond will update the government’s spending plans in its annual Budget next week.
“With employers’ confidence in the prospects for the U.K. economic growth diminishing, we need a budget next week that gives businesses the support they need to drive the economy,” said Neil Carberry, chief executive of REC. “Getting the tax system right is a priority.”
Companies have threatened to move factories out of the U.K. if trading conditions with EU undergo an overhaul, while concerns that labor will be in short supply has already driven the manufacturing outlook to the weakest in three years.
On Tuesday, the French government warned firms to begin preparing for all Brexit scenarios, including no deal. At a closed-door meeting at the finance ministry, Secretary of State Agnes Pannier-Runacher recommended business leaders identify measures to limit the impact and begin alerting their suppliers.
In the U.K., Hammond will have to come up with an additional 31 billion pounds ($40.3 billion) by 2022-23 to fulfill May’s pledge to end years of spending cuts while sticking to his own fiscal targets, according to a report published by the Resolution Foundation on Wednesday.
“The Chancellor has a seemingly impossible task in his Budget of ending austerity, reducing the national debt and keeping the public finances protected against any Brexit uncertainty,” said Matt Whittaker, deputy director at the Resolution Foundation. “Ending austerity, while also keeping debt falling as a share of the economy, will therefore require tax rises.”
To contact the reporter on this story: Anurag Kotoky in London at akotoky@bloomberg.net
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Brian Swint, David Goodman
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