Employer confidence in the UK’s economy is at its lowest since the referendum, with a net balance of -14, according to the latest JobsOutlook survey from the Recruitment & Employment Confederation (REC).

The survey data, which polled 600 employers across the UK, showed that 35% of respondents think that the country’s economic conditions are getting worse, while 22% think they are improving. The net balance of hiring and investment decisions has also fallen by two points to nine.

At the same time, a third of respondents (34%) say political and economic uncertainty is the main challenge to their business. However, a shortage of suitable candidates for jobs is the other main challenge for 24% of employers.

The survey also showed that the proportion of employers who respond ‘don’t know’ when asked about short term hiring intentions for temporary staff has increased to 27% from 9% last year. 

Per the REC’s data, employers in London have the strongest reaction to uncertainty, with 49% being unsure about the number of temporary workers in their organisation in the next three months. In addition, the number of employers transferring more than half of their temporary staff to permanent status has gone down (5% in January 2018 compared to 16% at the same point last year).

Meanwhile, the net balance of employers who plan to increase rather than decrease their permanent staff over the next three months has fallen from 19 in January 2017 to 14 this year.

“It looks like political uncertainty is a serious problem for British businesses as they start the new year,” REC chief executive Kevin Green said. “The government’s inability to conclude Brexit negotiations is having an impact on employers' decision making. Confidence in the economy is dropping and we now see this is starting to affect hiring intentions as more employers are unsure about the impact of Brexit on the economy.”