Omicron, inflation and shortages compound to spike UK businesses

A cocktail of Omicron, soaring inflation and ongoing worker shortages are spiking UK businesses, reveals a fresh study released today.

Business confidence in the UK economy dipped nine percentage points over the last three months to minus six, according to the Recruitment and Employment Confederation (REC).

The emergence of the Omicron variant of coronavirus has ignited uncertainty over the trajectory of the UK economy over the coming months.

Fears over catching the new strain has led to consumers staying indoors, hitting high street retailers and hospitality firms, while the prospect of the UK government tightening restrictions on economic activity to crush Omicron infections has clouded the economic outlook.

Prime Minister Boris Johnson is expected to make a decision on whether to impose a short “circuit breaker” shortly after Christmas Day.

Yesterday, he confirmed no new measures would be introduced before Christmas.

Kate Shoesmith, deputy chief executive of the REC, said: “Labour shortages and worries about rising inflation have been weighing on employers’ minds for a while now.”

“With the Omicron variant added into that mix, it’s no surprise to see business confidence in the economy falling slightly.”

Businesses are being squeezed by a sharp rise in the cost of production. According to the Office for National Statistics, components are more than 14 per cent more expensive than they were a year ago.

The REC’s research also suggested the end of the furlough scheme on October 1 failed to clear the labour crunch that has generated supply chain snarl ups.

“In November, roughly one month after the end of the furlough scheme, the majority of employers (51 per cent) had seen no change in the availability of candidates for vacancies,” the REC said.