According to a new study by accountancy firm BDO, the number of firms planning to take on new staff has grown at the fastest pace for 16 years, indicating that British businesses are now confident that the recovery is well under way.
The BDO Employment Index shows that British firms’ intention to take on new workers in the coming quarter rose to 109.6 in July, marking the highest level since 1998 and a significant increase from the 108.8 figure recorded in June.
This rise was largely thanks to employers within the booming services sector chasing growth prospects and indicated that the third quarter will again see the unemployment rate in the UK fall.
Unfortunately, the report also indicates that skills shortages are beginning to actively affect businesses, with BDO partner Peter Hemington pointing out that construction firms are now being forced to reject work due to their inability to source suitably skilled contractors.
Mr Hemington believes that the Government must intervene to ensure that these shortages do not have a detrimental effect upon the economic recovery.
He says; “This could bring the stellar growth we’re enjoying in the wider economy to a grinding halt if the trend becomes entrenched.
“To address [skills shortages], the Government must ensure its protectionist tendencies are put on hold until productivity returns to pre-crisis levels.”
Despite the skills shortages, the BDO Business Trends report found that optimism remains high – in fact, July saw the highest level in this area for more than a year. Although the rate of acceleration in business confidence has slowed somewhat in recent months, factors such as a stable rate of inflation and strong Sterling reducing the cost of imports have made businesses relatively secure in their short term prospects.
Another positive discovery by the BDO was the fact that university graduates are once more in demand by British businesses. Employment prospects for new graduates have now reached their strongest level since before the credit crunch and resulting recession, giving school leavers confidence that the £9,000 per year cost of attending university may well be worth it after all.
Mr Hemington continues; “Although a new wave of graduates will go some way towards meeting businesses’ needs, readily available and flexible labour from Europe could relieve pressure on businesses in the short term.
“The good news is that the unprecedented growth we’ve seen in UK employment this year looks set to continue, providing this year’s university graduates with a welcome dose of good news in terms of job and salary prospects.”
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