Blog: Ian McConnell: Little hope of blinkered Tories tackling UK’s unfolding post-Brexit shambles – HeraldScotland

THE degree to which labour shortages have come to dominate so much of what is occurring in the economy might well by now be startling even some of the unblinkered who could see clearly what a post-Brexit world would look like.

What is clearer by the day, and it was very foreseeable indeed from the outset of the Brexit crusade, is that the inability of businesses and other organisations to find the labour and skills they need is holding back dramatically UK economic growth.

It is a sorry situation indeed.

While Brexit is not the only factor in the jaw-dropping labour and skills shortages, it is extremely clear that it is a major one.

READ MORE: Caledonian MacBrayne should be treated as national treasure: Ian McConnell

And why oh why, with businesses unable to operate at full capacity because of a lack of workers, does this Conservative Government continue with its foolish determination to ensure huge numbers of people in the European Economic Area who could have filled the vacancies are no longer able or inclined to do so.

It should have been plain for all to see from a long-term perspective, way before the coronavirus pandemic hit, that the UK’s ageing population meant strong net immigration was crucial to ensuring growth and living standards could be maximised. Immigration is also key to ensuring enough money is raised in taxes to pay for vital public services, some of which will become increasingly expensive to deliver given demographic factors.

The importance to the Scottish economy of the huge pool of labour and skills in the EEA has been evident for many years now. At least north of the Border, judging by the way the electorate voted on Brexit, the contribution of EEA citizens who were able to live and work in Scotland because of free movement of people was properly appreciated.

Sadly it seems from the mood music in many places in England, as the Conservative Government calls the tune, that people have still not woken up to the fact it is the Tories’ post-Brexit clampdown on immigration that is behind much of the labour and skills shortages. These shortages are wreaking havoc on the economy by restricting output and exacerbating the inflation crisis. They are also affecting many people’s everyday lives.

In a survey published last week by accountancy firm Deloitte, two out of five UK company chief financial officers reported that their businesses faced significant or severe recruitment difficulties in the second quarter. This 40% figure is up from 35% in the first quarter, and finance chiefs anticipate labour shortages will persist, with one-third saying these will be significant or severe in a year’s time. That is not in any way a good outlook.

And the survey reveals UK CFOs are now assigning a probability of 63 per cent to a recession in the UK within the next year.

Meanwhile, a survey published on Monday by the Federation of Small Businesses shows mounting overheads, skills shortages and concerns about the economy punctured Scottish business confidence over the latest three months. Access to skilled staff was raised as one of the biggest barriers to growth by 39% of Scotland’s small businesses.

Andrew McRae, FSB policy chair for Scotland, said: “Overheads are rising, and every penny spent at the pump or on energy bills is cash that can’t be used elsewhere. Businesses in sectors such as retail, tourism and hospitality – especially in rural areas – are finding it difficult to recruit and retain staff.

“These factors mean that far too many businesses say they’re operating at far from their maximum capacity, which in turn slows down their ability to recover from the hits they took over the course of the pandemic.”

Shan Saba of recruitment business Brightwork, a major player in outsourced hiring activity across Scotland’s food and drink sector, said difficulties in recruiting workers are “very common” in rural areas where a lack of affordable housing and sparse populations exacerbate staffing issues.

He told The Herald last week that the current crisis is “purely down” to Brexit, adding: “The only thing that Covid did was speed up the inevitable significant tightening of the labour market.”

The recruitment expert added that companies which have been most successful in managing these issues are those offering “complete flexibility”, including weekends only, one day per week, and student-friendly and family-friendly shift patterns.

“It is the UK labour force that we need to concentrate on now, and what do UK workers want? They want flexibility,” he observed.

READ MORE: Ian McConnell: Preposterous to claim protocol changes do not warrant robust reaction from EU

UK private-sector growth has slowed to a “crawl” this month, registering its weakest pace since the early-2021 lockdowns amid staff and material shortages and softer demand, a survey published last week by the Chartered Institute of Procurement & Supply and S&P Global shows.

Companies responding to the survey reported that worries about the outlook and labour shortages had led to non-replacement of leavers.

And a report published last week by GfK shows UK consumer confidence has remained stuck this month at the lowest since comparable records began in 1974, with the pollster describing the cost-of-living crisis as a “red-hot issue” for households.

The message is loud and clear – the Tories have slammed the brakes on economic activity and by extension borne down on living standards at the worst possible of times with their ill-judged ending of free movement between the UK and EEA countries.

The warning from Mr McRae about firms operating at far from maximum capacity, and the general slew of indicators of the great damage being done to the economy by skills and labour shortages, should have been a wake-up call for the Conservative Government.

However, it continues not to listen.

READ MORE: Ian McConnell: Brexit: UK Stagnation Nation reality at odds with Tory tale of post-Brexit utopia

James O’Brien, author of How Not To Be Wrong: The Art Of Changing Your Mind and presenter on radio station LBC, summed up the Brexit problem well on Monday when he declared that “you cannot clean up a mess while the people who made the mess are claiming that it is a glittering success”.

The Conservatives have for years now focused on their ideology at the expense of households and businesses. Their failure to see, or refusal to acknowledge, the utter shambles that is Brexit gives no hope that the labour and skills shortages are going to be addressed in any serious way. And the Tories have now thrown into the mix some more introspection with a leadership contest, now whittled down to Liz Truss and Rishi Sunak, that seems frivolous in nature given the serious and pressing challenges the country and its electorate are facing.

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