UK businesses are not increasing their recruitment and investment plans since the start of the year, despite confidence reaching a two-year high since the EU Referendum vote, according to the latest Business in Britain report from Lloyds Bank.
The confidence index – an average of respondents’ expected sales, orders and profits over the next six months – edged slightly higher to 25 per cent compared with 23 per cent in January 2018. It remains above the long term average as businesses are more confident than at any point since the EU Referendum vote in June 2016.
The Business in Britain report, now in its 26th year, gathers the views of over 1,500 UK companies, predominantly small to medium sized businesses, and tracks a range of performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative.
Investment and recruitment muted but difficulty remains in finding the right skills
The net balance of firms looking to grow investment in the next six months fell marginally by one point to 12 per cent, while a net 8 per cent of firms anticipate an increase in their headcount, compared with 9 per cent in January.
The share of firms who continue to report difficulties in hiring skilled labour increased three points to 49 per cent and remains historically high with London (65 per cent) and the West Midlands (57 per cent) finding it the hardest to recruit.
Brexit uncertainty and weaker UK demand top firms’ concerns
Brexit uncertainty remains the single greatest risk to firms in the next six months, cited by 21 per cent of firms, closely followed by weaker UK demand at 16 per cent.
Over a third (36 per cent) of businesses expect a negative impact on their business if no trade agreement is reached with the EU. A fifth (20 per cent) expect a positive impact while almost half (44 per cent) do not expect any impact or didn’t know.