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13 November 2018

One in three small firms held back by lack of skills as Brexit clock ticks

Responding to a fall in the unemployment rate from 4.3% to 4.1% over the last year and a flash productivity estimate indicating that output per hour decreased by 0.4% in Q3 2018, Federation of Small Businesses (FSB) National Chairman Mike Cherry said:

“More than one in three small firms now say lack of access to the right skills is holding back growth – up from roughly a quarter at this time last year.

“One in five small employers rely on staff from the EU. With net migration from Europe falling, it’s increasingly a challenge for firms to recruit from the vital pool of EU talent based here in the UK. If we don’t see a pro-business withdrawal agreement signed before the month is out, this challenge will become even more pronounced and entrenched. The Brexit clock is ticking.

“It’s critical to remember that 95 per cent of small firms have never made use of the UK’s points-based immigration system. If they’re lumbered with complex paperwork to bring in EU staff post-Brexit that will cause a significant drag on the billions they contribute to the economy each year.

“With the labour market so tight, we also need to look at bringing those furthest from the workplace into employment. The Government must deliver on its promise of a national insurance holiday for small businesses that hire society’s most vulnerable.

“Increasing productivity in the current climate is a tough ask. How are you supposed to invest for the future when you don’t know what the future looks like? More than two thirds of small firms are not planning to increase investment over the coming quarter, and it’s hard to blame them.

“Faced with a situation where trading arrangements could be turned on their head in four months’ time, a lot of business owners are understandably delaying big decisions. If we want to see firms devoting funds to training, R&D and new equipment – thereby increasing productivity – we need to see a Brexit deal that protects their interests. That starts with a meaningful transition period.”