Almost Half U.K. Firms Plan to Cut or Freeze Hiring, CBI Says

(Bloomberg) -- Almost half of firms plan to cut hiring or not recruit at all over the next year, the U.K.’s biggest business lobby group said, adding to the gloom surrounding the country’s job market.

While 51% of companies said they plan to expand or maintain recruitment levels, 46% said they would not, according to the Confederation of British Industry’s annual survey, which drew responses from 248 firms. The positive balance of 5% was down from +56% last year, the CBI said.

The survey comes three days after official data showed the U.K. has shed 700,000 jobs since the start of the coronavirus pandemic, with the unemployment rate increasing to 4.1% from 3.9%.

Economists warn that might be the calm before the storm, predicting as many as 3 million people may be out of work by the end of the year, up from 1.4 million currently. That’s because the government’s furlough program, currently supporting 1 in 10 jobs, is due to end on Oct. 31.

“The U.K. labor market has been under heavy stress since the outset of the Covid-19 crisis and, although the economy has started to re-open, pressure on firms remains acute,” CBI Chief U.K. Policy Director Matthew Fell said in a statement. “With ongoing social distancing, higher costs, lower demand, local lockdowns and fears of a second wave, firms are tempering their recruitment plans.”

Other findings of the survey, carried out in conjunction with recruitment company Pertemps, include:

• A balance of +7% of firms expect their workforce to be bigger in a year’s time, compared to +28% in last year’s survey
• Some 48% will examine options to restructure their company
• A third of companies plan to freeze pay across all roles
• Half of companies said, in light of the pandemic, they’d taken steps to protect jobs, including through reducing working hours, cutting bonuses and slashing overtime pay

©2020 Bloomberg L.P.