Responding to today’s labour market figures, which show the employment rate at its highest since 1971, and unemployment falling by 52,000 between April and June, James Sproule, Chief Economist at the Institute of Directors, said:
“The labour market continued to perform well in the run-up to the referendum, with unemployment falling and employment rising. The question is of course what will happen as a result of the Brexit vote. We expect that hiring will slow down, but it is important to point out that with employment at a historic high, this would probably have happened regardless of the referendum result.
“If employers behave now as they did after the 2008 crash, holding on to more workers than in previous recessions, we do not think that there will be an immediate large spike in unemployment. 80% of IoD members say they are unlikely to give a pay rise in the next three months, but at the same time, 80% of members do not intend to reduce employment.
“We are in a period of uncertainty while the UK establishes a new relationship with the EU, and that means investment decisions are being delayed. This is particularly marked in the construction sector, with half of firms in this area putting hiring on hold, according to the Bank of England. We will have to wait see whether delays turn into redundancies when Article 50 is triggered, and the process for leaving the EU begins.
“This means the Government must get on the front foot and take confidence-boosting measures like increasing investment allowances, simplifying the tax system for small and medium-sized firms, and approving a new airport runway for the South East.”