British jobs market 'in freefall' after Brexit vote as Bank warns 250,000 jobs will be lost over next few years
- REC: Permanent job placements fell at the fastest pace since 2009 in July
- The biggest falls in new permament placements were recorded in London
Hiring by UK companies has fallen to levels not seen since the recession, according to a survey that supports the Bank of England’s claim that unemployment is set to rise following the decision to leave the EU.
The UK jobs market ‘suffered a dramatic freefall’ in July, with firms being ‘highly cautious’ about hiring new staff following Brexit, recruiters have said.
The Bank yesterday warned of a ‘material slowdown’ in the economy and of higher unemployment and lower wages as firms grapple with weaker output and higher costs on imports due to the devaluation of the pound.
Workers: The biggest falls in new permament placements were recorded in London, REC said
Despite attempting to prop up the country’s economy with a cut in interest rates, more QE and cheap credit for banks, the Bank’s governor Mark Carney said that the numbers of jobs lost due to a slowdown would probably amount to 250,000 over the next few years.
The survey by the Recruitment and Employment Federation out today seems to support that assertion. The number of people placed in permanent jobs decreased for a second successive month in July at the fastest pace since May 2009.
The biggest falls were recorded in London, although employers also stayed put in the Midlands, South and Scotland. Only the North saw a rise in placement, albeit the weakest in over three years.
REC said that many of the firms it surveyed preferred to wait to take on new permanent staff until Brexit negotiations will clear some of the current uncertainty.
Labour market: Many survey indicators of employment softened ahead of the referendum - and those available since have fallen further
This led to a rise in temporary billings in every region as some firms shifted towards short-term staff in July. Pay for both temporary and permanent staff meanwhile rose at the slowest rate since February.
‘The UK jobs market suffered a dramatic freefall in July, with permanent hiring dropping to levels not seen since the recession of 2009,' REC chief executive Kevin Green said.
'Demand for staff remains strong with vacancies continuing to rise, but the sharp fall in placements suggests that businesses are highly cautious about committing to new hires. Economic turbulence following the vote to leave the EU is undoubtedly the root cause,’
However, Green added that the long term consequences of the EU referendum on UK jobs were still unknown, echoing what the Bank stated in its inflation report yesterday.
The Bank said: ‘There is at present very little evidence to assess how the labour market is evolving following the referendum.’
And added: ‘Surveys of changes in companies’ employment and their employment intentions conducted since the referendum have fallen and are now below their past averages.
‘Additionally, those surveys that have asked specifically about the impact of the vote indicate, on average, that over half of firms expect the outcome to reduce recruitment, in some cases significantly. There is, however, less evidence that firms are expecting to make redundancies in response to the result.’
The boss of Nissan today offered futher evidence that companies are holding off from taking big decisions until Brexit negotiations start.
Carlos Ghosn said he they were not ready to make decisions on plans for its Sunderland plant, which employs 6,700. But he added he was 'reasonably optimistic' that the UK will continue to be a key partner of the European Union.
He told the BBC: 'Well I don't think today you can talk about any impact before we see what is the new status of the UK. The question of Sunderland - Sunderland is a plant which is a European plant based in the UK.
'Most of the production out of Sunderland is exported to Europe. So obviously for us the relationship which is going to prevail between the UK and Europe is very important. So the future investment decisions are going to depend a lot into ... Okay, the UK is out of Europe. Fine. But what's going to be the new status?
'So you're going to see a period where most companies are going to be waiting to see what's going to be the new status.'
More than six out of 10 people in Sunderland voted to leave the UK.
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