Employer confidence in the UK economy has moved into negative territory, according to the latest JobsOutlook survey by the Recruitment & Employment Confederation (REC).

The net balance fell from +6 per cent last month to -3 per cent in the latest report, as 31 per cent of employers now expect the economy to worsen and just 28 per cent expect it to improve. Comment REC chief executive Kevin Green.

Employers are still looking to hire, with one in five (19 per cent) planning to increase permanent headcount in the next three months. Confidence in making hiring and investment decisions remains positive with a net balance of 10 per cent, but is at its lowest for the past year.

In addition to signs of deteriorating employer confidence, consumers are also becoming more pessimistic. The GfK’s index of consumer confidence fell to -12, equalling last year’s post-referendum low. The latest JobsOutlook survey of 601 employers also shows: 40 per cent of employers have no spare capacity and would need to recruit to meet additional demand more employers express concerns about a lack of appropriate candidates for construction jobs (both temporary and permanent) than any other area.

REC chief executive Kevin Green says: “The jobs market continues to do well despite growing uncertainty. However, this drop in employer confidence should raise a red flag. Businesses are continuing to hire to meet demand, but issues like access to labour, Brexit negotiations and political uncertainty are creating nervousness. Employers in the construction sector are especially concerned as they rely heavily on EU workers to meet the growing demand for housing and to support the government’s infrastructure plans.

“The added factor of dropping consumer confidence is putting some businesses on edge. If people reduce their spending, businesses will be impacted.

“The government must do more to create an environment where businesses have clarity. That means clearly laying out what Brexit plans look like and how employers can keep recruiting the people they need from the EU. The jobs market is in a good place but employers will only continue to hire and invest if they feel assured about the future.”