Half of British employers think the country’s attractiveness as a place to invest and hire will diminish over the next five years as it leaves the European Union, an annual business survey showed on Monday.
The Confederation of British Industry (CBI) and recruitment agency Pertemps Network Group said there was scant sign that uncertainty around Brexit had hurt companies’ hiring plans for next year or plans for pay increases.
But worries about the longer-term outlook escalated sharply.
Some 50 percent of companies thought Britain would end up a less attractive or much less attractive place to do business in five years’ time – double the proportion in last year’s survey.
Twenty-nine percent thought Britain’s allure for businesses would increase.
Britain’s labor market has been resilient to the shock of June’s vote to leave the EU, but the Bank of England expects unemployment to rise next year as growth slows.
“However, this year’s survey does show a greater sense of concern about the UK’s long-term attractiveness as a place to create jobs,” CBI deputy director-general Josh Hardie said.
Worries about access to highly skilled migrants topped the list of threats to Britain’s labor market competitiveness in the next five years, jointly with long-running complaints about skill shortages.
In last year’s survey, access to migrants ranked fifth in this list.
Last week, finance minister Philip Hammond said he could not conceive of a situation in which Britain would choke off the supply of highly skilled and highly paid workers, though it is unclear if all his colleagues share that view.
Fifty-seven percent of firms said they planned to increase pay by at least the rate of retail price inflation (RPI) in their next pay review, up from 51 percent last year.
RPI rose to 2.2 percent in November and looks likely to head much higher next year, as the pound’s drop since June’s Brexit vote pushes up the cost of imports.
Other surveys, such as one from the Chartered Institute of Personnel and Development, show little sign that companies are likely to ramp up wage settlements.
The CBI report showed more than a quarter of companies raised prices after the introduction of a new higher minimum wage in April, and would continue to do so as the minimum wage rises in coming years.
By contrast, 41 percent said they had absorbed the cost of the higher minimum wage.
The survey of 353 companies took place between August and October.