UK manufacturing exports slumped to their lowest level in two years, anxiety among businesses hit its highest level since the Brexit vote and the proportion of firms having difficulty recruiting staff is at a record high, two surveys have found.
The proportion of firms looking to recruit fell from 60 per cent to 47 per cent, the lowest in 25 years, the British Chambers of Commerce found. Among those who are trying to hire, almost three-quarters can’t find the right staff, according to the poll of 5,600 firms.
The latest data adds to fears that firms could be damaged by an acute skills shortage as Theresa May and the home secretary, Sajid Javid, last week confirmed plans to slash immigration after Brexit.
The BCC said a slowdown in manufacturing exports in the last quarter was a further cause for concern. Sales to overseas buyers were predicted to receive a boost from the fall in the value of the pound but a small bump now appears to have subsided.
The balance of manufacturers expecting their prices to increase also rose, with 81 per cent citing the cost of raw materials as the driver of cost increases, the highest level for seven years.
Investment is also suffering thanks to uncertainty over future trading conditions, with the balance of manufacturing and services firms looking to invest in either plant and machinery or training falling in the to their lowest level in over a year.
Business confidence in turnover and profitability also weakened in the quarter. The balance of firms confident that turnover and profitability to increase in the next 12 months fell, from +47 to +44 for turnover and +35 to +29 for profitability.
A separate survey of finance bosses found that worries over the long-term impact of Brexit are mounting. Among chief financial officers polled by Deloitte, 79 per cent said they expect the long-term business environment to be worse after leaving the EU, up from 75 per cent in the second quarter of 2018 and the third successive rise.
Suren Thiru, BCC head of economics, said manufacturing remained a weak spot fo the UK economy with exports falling sharply over the last quarter.
“Brexit uncertainty and the increasing cost of imported raw materials is weighing on the UK’s external position – further evidence that the persistent weakness in sterling is doing more harm than good,” he said.
“As a consequence, net trade is likely to have contributed precious little to UK GDP growth in Q3.
“The sharp deterioration of the share of firms attempting to recruit is a concern and reflects both persistent hiring difficulties and heightened economic uncertainty – which if sustained could materially weaken jobs growth.”
Dr Adam Marshall, director general of the BCC, called for “radical” action to support businesses in the Budget to be announced later this month.
“There has never been a more important time for the government to bolster business investment, competitiveness and productivity, in the face of significant Brexit headwinds,” he said.
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