Businesses in the South West are having staffing problems as confidence slips and investment stalls due to Brexit uncertainty, a new report says.
Firms across the region are reporting staff turnover as a widespread concern in the third quarter of 2019, according to ICAEW – the Institute of Chartered Accountants in England and Wales.
And the body said it is concerned for the future too, particularly with the expected withdrawal of EU funding post-Brexit.
The professional chartered accountancy body’s quarterly ICAEW Business Confidence Monitor report for the South West, shows the proportion of businesses citing staff turnover as a problem is now significantly higher than at this time in 2018 - up from 24% to 35%.
The availability of non-management skills is also a growing source of difficulty for 30% of businesses, among the highest proportion across the UK.
The concerns business have over being able to obtain staff with the skills they need, and then being able to retain them may be because of the South West’s low unemployment rate.
The latest Labour Force Survey data from the ONS in the three months to June 2019 gives an unemployment rate of just 2.7% for the South West, the lowest across the UK, and this may be causing the continued tightness in the regional labour market, the ICAEW said.
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The report also said that business confidence in the South West stands at -10.9 in the third quarter of 2019 (Q3), still negative as it was in the previous three quarters, and close to the rating for the UK as a whole, which stands at -10.3.
Brexit uncertainty is likely to be impacting company sentiment, the ICAEW said, as well as the recent announcement from Honda that it will be closing its large Swindon car plant.
The overall weakness in business confidence is impacting business investment for the year ahead, the report said.
Companies plan to moderate growth in research-and-development and capital investment, with the former set to rise by 0.8% and the latter by 1.3% in the year to Q3 2020.
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However, some positive news is that companies anticipate export growth will remain strong at 5.1%, while little change is expected for domestic sales growth (4%).
But ICAEW believes that a cause for concern for businesses in the UK’s regions will be the impact of leaving the European Union, and the withdrawal of European business funding.
Cornwall, for example, will have received about £1.4billion from EU funds by 2020 and a sudden withdrawal of this funding could do significant damage to the region’s economy, the ICAEW said.
Martin Warren, ICAEW regional director for the South West, said: “Businesses have told us they are finding it hard to recruit and hold on to the staff they need.
“Having a low unemployment rate is good for the region, but it means that it is a jobseekers’ market.
“With fewer EU nationals taking roles in the UK there is greater competition for all levels of staff and employers are having to offer more generous packages to recruit and retain the best staff.”
