UK’s ‘eye-popping’ pace of recovery stokes staff shortages and inflation fears

·3-min read
<p>Member of staff cleans table</p> (PA Wire)

Member of staff cleans table

(PA Wire)

The UK’s post-lockdown boom is gathering pace at an “eye-popping” rate with latest figures from a closely watched market survey showing the strongest growth in business activity for 24 years.

Surging customer demand is also contributing to a recruitment crisis in the services and hospitality sectors, which in turn is causing higher wage demands — and higher prices.

The £8 pint, at least in London, is on its way if not already here.

The IHS Markit/CIPS PMI survey came in at a higher-than-expected 62.9 in May, up from 61 in April. Anything above 50 denotes growth.

Tim Moore at IHS Markit said: “The latest survey results set the scene for an eye-popping rate of UK GDP growth in the second quarter of 2021, led by the reopening of customer-facing parts of the economy after lockdowns.”

Survey respondents said higher than expected demand and staff shortages were firing up inflationary pressures: the output price index across the sector pointed to the fastest rate of inflation since July 1996.

The staffing shortage is particularly hitting the hospitality sector with more than half of bosses today warning they are struggling to recruit. The latest business confidence survey from industry analyst CGA and Fourth found 51% “anticipate shortages in all roles” with 39% worried they will be unable to recruit back-of-house positions.

Some pubs and restaurants are having to scale back or shutter parts of their operations despite the surging demand.

The British Beer & Pub Association today wrote to the employment minister “urging the Government to urgently do what it can to help”, including expansion of the Youth Mobility Scheme to allow more workers into the UK.

BBPA CEO, Emma McClarkin, said the staffing shortage has become acute and that “some pubs are having to reduce capacity or close entirely because they don’t have the staff to open”.

Michel Roux Jr, of Mayfair’s Le Gavroche, has had to close the restaurant’s famed lunch service. He said: “It is a shame to lose it. It’s a very scary situation we’re all in. I know I’m definitely not the only one — and that makes my business less viable, if viable at all.”

CGA’s survey also found firms are struggling to motivate long-furloughed teams, with 47% saying improving employee productivity will be a major focus.

Director Karl Chessell said: “Recruitment and retention are going to be huge concerns for hospitality over the remainder of 2021. Post-Brexit shortages had been expected for some time, but COVID-19 has multiplied the difficulties and many businesses are already facing a staffing crisis at the worst possible time.”

Today London mayor Sadiq Khan ​backed industry calls for a “coronavirus recovery visa”.

The Home Office said earlier this week it wants employers to focus on training and investing in British workers to fill gaps, but that it is making it “simpler” for employers to hire from the EU and around the world.

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