UK employers keep hiring but see Brexit risks ahead

LONDON: British employers plan to hire more workers and raise pay more quickly in 2018, but they also fear that Brexit will make the country a less attractive place to do business, a survey showed yesterday. Fifty-one percent of employers expect to expand their workforce next year, the survey by the Confederation of British Industry (CBI) and recruitment firm Pertemps showed, up from 41 percent in last year’s survey.

Strong job creation has been a bright spot in Britain’s economy in recent years, but recent official data has shown a fall in employment, leading some economists to wonder if the labor market is about to weaken.

Slightly more than half of businesses expected to raise pay next year in line with or above the rate of retail price inflation, which could mean increases of around 3 percent, up from about 2.5 percent now, the survey showed. Such an increase would be line with the Bank of England’s forecasts.

The failure of pay to pick up quickly, even as unemployment falls fast, has puzzled central banks in many rich countries. Britain’s problem is made more acute by the spike in inflation caused by the pound’s decline in value after the Brexit vote in 2016.

The CBI survey, which was conducted before Prime Minister Theresa May secured an agreement from Brussels to move Brexit talks to a second phase, showed companies were worried about the outlook for Britain’s economy further ahead.

May has said she will no longer uphold the European Union’s freedom of movement rules which allow workers from countries in the bloc to seek work in any EU country.

“Firms are concerned about finding the right staff in the future, and this is damaging the outlook for investment in the longer term,” said Neil Carberry, the CBI’s managing director for people policy.

Almost 90 percent of companies said continued access to skills and labor from the EU was important or vital. “The worst thing we could do would be to undermine the many EU nationals already here and contributing to our businesses and public services,” Carberry said.— Reuters