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“We have one of the highest employment rates ever, but


companies still struggle to fill those jobs that are the least attractive to British workers, particularly in agriculture and hospitality. Skills shortages are severe in key industries, such as manufacturing and construction. And although it is vital the UK upskill its domestic workforce, free movement from the EU has helped companies overcome skills and labour shortages, and brought valuable talent into our workforces. “Business and government need to work closely to build an


immigration system that boosts the economy and society. We need to seek reassurances for EU migrants already in the country – and UK citizens resident in the EU – with clarification about how they can remain once the UK has left the EU. “The same applies to European students looking to study in the UK: a valuable source of income for our world-leading universities.”


The business perspective Over the summer, the CBI conducted a survey of hundreds of companies across the country in a bid to discover what they wanted from the Brexit negotiations. Ensuring the UK’s immigration system would continue to allow British firms the access to the people and skills they needed was one of five priorities that emerged. The other four were: retaining the ease of UK-EU trade that


businesses gain from the single market; balancing regulatory equivalence with the EU with flexibility and influence over the domestic environment; developing a clear strategy for international trade and economic agreements; and protecting the economic and social benefits of EU-funded projects. The government has partially addressed the last point by guaranteeing funding for agricultural subsidies and for scientific research projects until at least the 2020 general election. Analysts agree that businesses need certainty at a time when,


by the very definition of the limbo both the UK and the EU find themselves in, there is none. Immediately after the Brexit vote, economists' predictions were on the dark side of gloomy, with credit ratings agency Moody's forecasting that business investment would “weaken considerably” and consumer spending would fall. Since then, however, there has been a raft of economic data


and surveys that have defied the pessimists. Employment, consumer and business confidence, and even the property market, have bounced back since the initial hand- wringing that followed the announcement of the result of the 23 June referendum. City economists now believe the UK economy will grow by an average of 1.6 per cent this year and 0.7 per cent in 2017, according to HM Treasury’s latest study of forecasts. Barclays increased its 2016 forecast


sharply from 1.1 per cent to 1.5 per cent, partly because of the strong second-quarter GDP figures, which showed an acceleration of growth since the referendum, while Citigroup increased its prediction from 1.3 per cent to 1.7 per cent and Commerzbank from 1.2 per cent to 1.6 per cent. “Most firms in the UK are domestically


focused, so if the consumer sector is looking good, then the feared hit to investment might not be as great as was expected,” commented Martin Beck, economist at the EY Item Club.


Even so, the


UK will remain a member of the EU at least until the start of 2019 and, until its post- Brexit


future


becomes


clear, long-term investment by multinationals operating in the UK remains in doubt. This is particularly true of the UK’s booming car industry, which is enjoying its most productive era in more than a decade, producing more than a million cars in the first seven months of this year, almost 80 per cent of them going to export – and the majority of those bound for the EU.


Automotive sector: inward investment on hold Foreign owners predominate in the auto sector – including Honda, with a major plant in Swindon, Wiltshire; BMW, which produces Minis and Rolls Royces in the Midlands; Tata Motors, owner of Jaguar Land Rover (JLR); GM’s Vauxhall plant in Luton; Nissan, with the UK’s largest and still-expanding factory in Sunderland; and Toyota’s major manufacturing facility in Derbyshire. Yet Carlos Ghosn, Nissan’s chairman and CEO, has made it clear that future investment decisions are now on hold pending the outcome of the Brexit negotiations. “OK, the UK is out of Europe,” he told the BBC in August.


“Fine. But what’s going to be the new status? So you're going to see a period where most companies are going to be waiting to see what’s going to be the new status. We’re reasonably optimistic that, at the end of the day, common sense is going to prevail from both sides – that, as many people said, UK will still continue to be a big partner of the European community. “The question: what's going to happen in terms of customs,


what’s going to happen in terms of trade, what's going to happen in terms of circulation particularly of the products? All of these are very sensitive elements that are going to determine how, and how much, we are going to invest in the UK, particularly for the European market.”


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