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Brexit worries saw permanent, full-time hires fall for the first time since 2012

The uncertainty ahead of the EU referendum has weighted on recruitmen

Zlata Rodionova

Friday 08 July 2016 16:49 BST

In the week before the referendum almost 1.5 million jobs were advertised online, dropping to under 820,000 in the following week, according to CEB, a consultanc (Rex)

Heightened uncertainty after the EU referendum caused a plunge in hiring ahead of the vote in June.

The number of people placed in permanent positions fell in June, marking the first decline since September 2012, according to a report from Markit, a data company and the Recruitment and Employment Confederation (REC).

An index reading of 49.3 was recorded for permanent placements in June, down from 52.9 in May.

Data with reading below the 50 mark signals a decline on the previous month.

Salary growth for permanent and temporary roles also slowed to its lowest level since September 2013, according to data collected between 13 and 24 June.

Kevin Green, REC chief executive, said uncertainty during the run-up to the referendum saw many employers suspend permanent hiring and instead bring in temporary, contractor or interim staff to hedge against potential changes to their growth prospects.

“Whilst it is too early to assess what the impact of the vote to leave the EU will be on jobs, our data underlines the need for uncertainty to be minimised so that our economy and our labour market are not adversely affected,” Mr Green said.

“The best thing for business right now is clear and calm leadership and as much clarity as possible on what the post-EU future will look like,” he added.

Theresa May admits future of EU citizens living in the UK is uncertain

Mr Green said that the UK should stay part of the single market and retain access to skills across the EU to ensure the continued health of the country’s labour market and the economy.

“Before the referendum, businesses were already finding it increasingly hard to source the right candidates. Ensuring employers can still access the people they need to succeed must now be top of the list in any negotiations,” he said.

The uncertainty following the vote to leave the EU has also weighted on recruitment.

In the week before the referendum almost 1.5 million jobs were advertised online, dropping to under 820,000 in the following week, according to CEB, a consultancy.

Brian Kropp, HR practice leader at CEB, said that the 47 per cent drop in job openings compared to last year was far outside the normal fluctuations seen by the company, which tend to be between 5 and 10 per cent.

6 ways Britain leaving the EU will affect you

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1/66 ways Britain leaving the EU will affect you

6 ways Britain leaving the EU will affect you

More expensive foreign holidays

The first practical effect of a vote to Leave is that the pound will be worth less abroad, meaning foreign holidays will cost us more

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6 ways Britain leaving the EU will affect you

No immediate change in immigration status

The Prime Minister will have to address other immediate concerns. He is likely to reassure nationals of other EU countries living in the UK that their status is unchanged. That is what the Leave campaign has said, so, even after the Brexit negotiations are complete, those who are already in the UK would be allowed to stay

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6 ways Britain leaving the EU will affect you

Higher inflation

A lower pound means that imports would become more expensive. This is likely to mean the return of inflation – a phenomenon with which many of us are unfamiliar because prices have been stable for so long, rising at no more than about 2 per cent a year. The effect may probably not be particularly noticeable in the first few months. At first price rises would be confined to imported goods – food and clothes being the most obvious – but inflation has a tendency to spread and to gain its own momentum

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6 ways Britain leaving the EU will affect you

Interest rates might rise

The trouble with inflation is that the Bank of England has a legal obligation to keep it as close to 2 per cent a year as possible. If a fall in the pound threatens to push prices up faster than this, the Bank will raise interest rates. This acts against inflation in three ways. First, it makes the pound more attractive, because deposits in pounds will earn higher interest. Second, it reduces demand by putting up the cost of borrowing, and especially by taking larger mortgage payments out of the economy. Third, it makes it more expensive for businesses to borrow to expand output

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6 ways Britain leaving the EU will affect you

Did somebody say recession?

Mr Carney, the Treasury and a range of international economists have warned about this. Many Leave voters appear not to have believed them, or to think that they are exaggerating small, long-term effects. But there is no doubt that the Leave vote is a negative shock to the economy. This is because it changes expectations about the economy’s future performance. Even though Britain is not actually be leaving the EU for at least two years, companies and investors will start to move money out of Britain, or to scale back plans for expansion, because they are less confident about what would happen after 2018

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6 ways Britain leaving the EU will affect you

And we wouldn’t even get our money back

All this will be happening while the Prime Minister, whoever he or she is, is negotiating the terms of our future access to the EU single market. In the meantime, our trade with the EU would be unaffected, except that companies elsewhere in the EU may be less interested in buying from us or selling to us, expecting tariff barriers to go up in two years’ time. Whoever the Chancellor is, he or she may feel the need to bring in a new Budget

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A separate report by Boston Consulting Group (BCG) said London could be drained of 20 per cent of jobs as up to 80,000 banking and finance roles could be moved from the capital to other centre in Europe. This is worse than the 55,000 jobs lost in London’s financial sector during the years of the financial crisis between 2007 and 2010.

Insurance, pharmaceutical and biotechnology jobs could also go, BCG said.

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