Britain ‘on brink of a recession’ as jobs market falls
Vacancies in the biggest slump since 2010 as nervous bosses cut spending
FEARS are mounting that Britain is hurtling towards its first recession since the financial crisis, after alarming new jobs figures indicated the sharpest slowdown in nearly a decade.
The Mail on Sunday can reveal that job vacancies advertised on Reed, Britain’s most popular recruitment website, tumbled by 16,467, or 2.3 per cent, in the second quarter – the largest quarterly fall since 2010.
Such data from recruitment firms is seen as an early warning sign of a slump because they chart jobs advertised, whereas official data measures jobs that have been filled.
When bosses stop advertising posts, it often indicates they are nervous about taking risks – a trend that typically results in lower economic growth figures later down the line.
Several FTSE100 chief executives told The Mail on Sunday they had drastically curtailed spending in preparation for a downturn, prompted by the approach of Brexit and signs the global economy is slowing.
James Reed, chairman of Reed, said: ‘Worrying storm clouds are forming around the UK’s job market. The largest fall in jobs since 2010 on the Reed website is a clear sign that the canary has fallen off its perch and that we are heading for a recession.’
A recession is defined as two consecutive quarters of the economy shrinking. Last week, data for June from the Office for National Statistics showed the economy recovered slightly from a one-month downturn in May. But Mr Reed said the brunt of the decline in job adverts happened very recently, with a 7.4 per cent fall in June alone.
The stark figures will heap pressure on the next Prime Minister – Boris Johnson or Jeremy Hunt – to oil the wheels of the economy after taking over from Theresa May.
The Mail on Sunday revealed last week that Whitehall officials were in talks with business leaders on ways to do this, including a headline-grabbing VAT cut. But Mr Reed said the next Prime Minister has a ‘mammoth task’, adding: ‘Brexit won’t be their only headache – stimulating the economy to avoid a recession should also be a priority.’
One FTSE 100 chief executive said last night his firm was sitting on £1 billion in cash to spend, which would create around 5,000 jobs. But Brexit uncertainty and current economic conditions had prevented him from acting.
Another company boss, Carl Arntzen of boiler giants Worcester Bosch, said Brexit uncertainty had forced his firm to delay investment decisions by two years.
He added: ‘I think we’re about to head into a recession. We see it as a Europe-wide recession and are planning for probably a two-to-three-year period. The last was 2008 so we’re overdue one. I think it’s just a general economic cycle and we’re seeing the early signs of it.’
The shock jobs drop from Reed follows a profit warning last week from recruiter PageGroup. The company grew in all regions except the UK, where it suffered a 2.4 per cent fall in gross profits in the second quarter. This was blamed on Brexit uncertainty and rival recruitment firm Robert Walters cited the same reason for its own UK slump.
Hospitality job adverts declined 24 per cent on the Reed website – the largest of any sector. The strife was underlined in accounts published last week by Frasers Hospitality UK, the owner of hotel chains Malmaison and Hotel du Vin, whose directors said the industry faced ‘some of the most challenging trading conditions seen for over a decade’. Along with a drop in permanent jobs advertised, Mr Reed reported growth in temporary hiring, indicating more caution among employers. He said: ‘Unemployment is at historic lows so I think it’s the business cycle, possibly exacerbated by Brexit uncertainty.’
And Clive Black, head of research at consultancy Shore Capital, said the UK could already be in a recession.
He said: ‘The new Prime Minister needs to gain a grip, and soon, to deliver clarity on the UK’s relationships with the EU and set in place short and long-term policies to foster an improved investment climate.’