UK businesses plan to cut jobs and investment, survey shows
UK businesses expect to cut staff levels and investment over the next year, according to a new survey, with the outlook “stuck in the doldrums”.
The Institute of Directors’ (IoD) survey showed that bosses’ optimism about the economy plateaued in September, having risen since the coronavirus-induced lockdowns of the spring.
The UK economy shrunk by a record 19.8 per cent in the second quarter as normal life ground to a halt in April and May. Although growth has been strong since then, rising coronavirus cases and new restrictions threaten the rebound.
A 10pm curfew for pubs and restaurants and advice to work from home have hit the hospitality and leisure sectors. Local lockdowns are also causing businesses and workers more pain.
The employment expectations of firms for the year ahead fell in September from minus six to minus 11 on the IoD’s gauge. Investment expectations also slipped.
“The overall business outlook appears to be stuck in the doldrums,” said Tej Parikh, chief economist at the IoD.
“The current restrictions put a lid on demand for a number of sectors,” he said. “But local lockdowns and the prospect of stricter measures down the road are putting even more businesses in a bind.
“It’s crucial that the test and trace system can start firing on all cylinders to ease some fears. Ongoing support for firms’ cashflow will also be crucial.”
UK businesses also concerned about Brexit
A separate survey from KPMG and recruitment group the REC showed people were losing their jobs “rapidly” in September. This caused a sharp increase in workers looking for new posts.
Chancellor Rishi Sunak last month unveiled new measures to support the economy. His new job support scheme is far less generous than the current furlough scheme, however, which has supported around 10m jobs and ends this month.
Despite this, The IoD said that company directors’ confidence in the wider economy continued to gradually rise in September. Yet it remained in negative territory.
Aside from coronavirus, bosses’ top concern was Brexit and the UK’s future trading relationship with the EU. This was followed by broadband problems and skills gaps, which the IoD said was “suggestive of the impact of remote working”.