UK firms see slower hiring, weak pay growth on Brexit fears
Fewer British employers expect to hire staff in late 2016 and will raise pay by less than inflation next year as the effects of the decision to leave the European Union set in, an industry body said on Monday.
The Chartered Institute of Personnel Development said more employers expected to hire staff than cut them in the fourth quarter of this year, but the net employment balance slowed to +22 in its latest survey from +27 in the previous quarter.
The CIPD also said wages in real terms were likely to fall next year because, for the second quarter running, employers expected to make basic pay settlements of just 1.1 percent while inflation is rising.
"The report points to the UK economy beginning to face some likely headwinds following the UK's decision to leave the European Union," Gerwyn Davies, a labor market analyst at the CIPD, said.
"Pay expectations are already weak, and as inflation moves up we can expect a period of low or negative real wage growth for the squeezed middle."
Annual inflation rose to 1.0 percent in September and is expected to climb toward 3.0 percent by the end of next year, reflecting the fall in the value of the pound since the decision by voters in June to leave the European Union.
So far, Britain's labor market and the broader economy have largely weathered the initial shock of the referendum result.
In a latest sign of confidence among households, credit card Visa UK said its consumer spending index rose by 2.5 percent in October compared with the same month a year ago, the strongest rate of increase in six months.
But economists expect a slowdown next year when Britain is due to launch its formal divorce talks with the EU. Prime Minister Theresa May has suggested she will take a tough approach with the bloc, raising concerns about how much access the country's exporters will retain to the EU's single market.
A separate survey published on Monday by financial data firm Markit showed business sentiment edged down in October to its lowest level in over four years.
The CIPD report showed employers were also concerned about their ability to recruit workers from the EU, with just 6 percent favoring a so-called hard Brexit resulting in a clamp-down on the free movement of labor from the bloc.
"For years, the UK has been one of the most attractive countries for EU workers, benefiting from easy access to a large, European talent pool," said John L. Marshall, chief executive of Adecco Group which co-produced the survey.
He said the Brexit decision was "a wake-up call" for employers to invest more in training.
Separately on Monday, property website Rightmove said the price of homes on sale in England and Wales fell by 1.1 percent in November, a smaller drop than usual for the time of year, adding to signs that the Brexit vote has not had a big impact on the housing market.