The UK’s July lockdown rules were relaxed, which led to a surge for hiring, although the impact of Brexit and the pandemic could hinder the recovery, as the professional services firm BDO reported Monday.
BDO’s latest business trends reports found that there was an increase in employment last month. This is because bars and restaurants, as well as other hospitality venues, were permitted to operate without Covid capacity limits.
BDO reported that many firms experienced labour shortages due to the pandemic. The NHS Covid app was used to tell workers to isolate themselves and to avoid Brexit. This led to a scramble of workers, pushing up wages, and leaving bosses worrying about rising prices.
BDO’s employment indicator rose 1.57 percentage points from 106.05 (June) to 107.62 (July), showing the strongest hiring pickup so far this season. BDO’s index of inflation, which tracks the rise in prices, fell to a record low in June. Business optimism was down from the June record high.
BDO reported that the UK’s withdrawal from the EU has put pressure on global supply chains. This, combined with problems importing goods, caused by the UK leaving the EU, has pushed up the costs. Additionally, rising wages have led to employers paying more to keep and attract top talent.
Sign-on bonuses for job applicants have been offered by some companies as high at PS10,000.
Last week, Bank of England predicted that unemployment was at its highest point, with tight labor markets making it difficult for employers to hire workers. The Bank predicted that inflation would rise to 4% by the year’s end, a record for the Bank over the past 10 years.
Kaley Crossthwaite a partner at BDO LLP said, “The surge of employment is a timely lift and shows how rapidly the relaxation of restrictions has affected the economy.” “It now seems that one of the most difficult problems employers will face will be filling positions as both the pandemics and Brexit lead to staff shortages.”
A separate survey done by Azets, an accountancy firm, revealed that nearly three-quarters of UK small business owners felt optimistic about the UK’s economic outlook over 12 months. Over half of those firms also expected to increase their workforce.
But, the SME Barometer also revealed a regional split with 71% London and south-east small businesses feeling positive about UK’s economic outlook compared with 60% in Scotland or 59% in Yorkshire and Humberside.
Many firms, especially outside London, the south-east and beyond, saw Brexit as a threat along with the economy, Covid-19, competition and the economy.
“After a year in deep crisis and turmoil, with the European vaccination programme increasing and lockdown restrictions starting to ease, we feel that the prospects of an economic revival are within our reach. Chris Horne is the Azets group CEO.