UK Enters Technical Recession

The Office for National Statistics (ONS) has recently disclosed that the UK’s economic situation has deteriorated, with the real Gross Domestic Product (GDP) declining by 0.3% in the fourth quarter (October to December) of 2023. This downturn follows a 0.1% decrease in the preceding quarter, signalling the start of a technical recession, defined by two successive quarters of contracting output. The aggregate contraction for the latter half of 2023 amounts to 0.5%, with a year-on-year decline of 0.2% in real GDP, highlighting significant economic challenges.

In response to these pressing circumstances, the Association of Professional Staffing Companies (APSCo) has issued a call to the UK government for the enactment of proactive, pro-growth policies aimed at revitalising the economy. Tania Bowers, APSCo’s Global Public Policy Director, stressed the necessity of adopting strategies that will not only stimulate growth but also create a conducive environment for businesses and workers to prosper. Bowers pointed out that addressing critical issues such as skill shortages, regulatory ambiguity, and unfair labour practices is crucial for establishing a resilient and competitive economic future.

With the spring budget announcement impending on 6 March, APSCo has put forward a comprehensive suite of policies designed to tackle the principal obstacles to growth and employment opportunities. The recommendations include:

Exemption for Highly Skilled Workers: The organisation proposes that highly skilled workers be excluded from the Agency Workers Regulations, a move intended to facilitate hiring and investment by simplifying the talent acquisition process.

Reform of the Apprenticeship Levy: Advocating for an expansion in the scope of the Apprenticeship Levy to better reflect current skill requirements, thereby increasing the efficacy of this vital funding mechanism for training and development.

Establishment of Regional Skills Hubs: The call for enhanced collaboration between the government and businesses underscores the potential of creating regional skills hubs as a means to strengthen training initiatives and address the skills gap.

Flexibility in Visa Policies: The organisation highlights the importance of more flexible visa policies designed to attract and retain highly skilled workers, thereby mitigating labour shortages that impede growth in crucial sectors.

Review of IR35 Regulations: Regular reviews and adjustments of the Off-payroll (IR35) regulations are considered essential for maintaining a balanced and conducive environment for both businesses and contractors.

As the UK faces the consequences of its technical recession, the need for targeted, pro-growth interventions has become increasingly apparent. The proposals put forth by APSCo offer a roadmap for recovery, emphasising the critical role of strategic policy reforms in catalysing economic rejuvenation. With the government’s spring budget on the horizon, the potential adoption of these measures represents a beacon of hope for the UK’s economic revival.