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Market report: Recruiters fall by the wayside as Brexit staffing fears begin to bite

Mark Shapland
Brexit: Staffline dropped after admitting recruiting staff from overseas was a problem: Oli Scarff/Getty Images

Brexit fears loomed large over the UK recruitment sector today after AIM-listed Staffline admitted that revenues would not meet City hopes.

The firm — headed by Andy Hogarth who has spoken about battling depression in early life — specialises in getting people off benefits and into work.

The Nottingham-based agency said full-year revenue would fail to hit its £1 billion target and shares fell 12.7p at 997.3p.

The announcement hit other recruiters: FTSE 250-listed PageGroup and Hays fell 16.6p to 446.8p and 1.8p to 181.5p respectively.

Many employers expect the economy will worsen over the next year as the UK prepares to leave the EU, meaning they are less likely to recruit new staff.

Recruiters have noted building companies are increasingly feeling the pinch, with evidence of the vote to leave the EU meaning that foreign staff in the sector have gone home.

Other sectors expected to be hit hard include health and social care, engineering and jobs in technology.

But brokers stuck by Staffline, pointing to the firm’s strong sales growth — finnCap said it would be making no changes to forecasts, and reiterated its Buy recommendation.

“Sales growth will be 9% up on 2016. Demand in staffing has remained strong in the second half and ‘excellent growth’ in the number of OnSites has continued, boding well for continued strong growth this year. New contract wins have continued in employability, skills and justice.”

Holiday mood persisted in the City and the FTSE 100 hardly moved at all, slipping 0.19 point to 7647.91.

Babcock International was struggling despite winning a further five-year deal worth £115 million to provide maintenance support services to the Australian Navy. Shares fell 9p to 709p.

On AIM, WANdisco made a move higher after the live data company told investors it had won a $4.3 million (£3.2 million) contract from an unnamed financial services company.

It was helped by business partner IBM and said its product was selected after an extensive period of testing.

Analysts at Peel Hunt cheered the deal. “Due to the business-critical nature of the data handled, extensive testing over several months was required, and Wandisco was selected as the only viable solution in the market,” the broker said.

WANdisco’s shares soared 28.6p at 598.6p.

In the top flight, Experian rose 36.4p to 1635.9 after Credit Suisse raised its target for the credit rating agency from Neutral to Outperform.