London – A Brexit-linked fall in net migration from EU nations has helped cause a "supply shock" for many British firms, worsening a productivity crisis in the country, an industry report said on Monday.

Strong demand for labour is increasing recruitment pressures for many employers, who complain of falling quantity and suitability of job applicants, said the CIPD, a professional institute for Britain's human resources industry.

"Supply shock" for British firms

"This is because the growth in labour supply is failing to keep pace with labour demand, exacerbated by a 'supply shock' of far fewer EU nationals coming into the UK," it said.

The report cited government data suggesting that the number of EU-born workers in Britain rose by just 7,000 in the year to June, after an increase of 148,000 in the previous 12 months.

Ongoing productivity crisis

Gerwyn Davies, senior labour market analyst for the CIPD, said the slowdown in EU arrivals was adding to Britain's "continued productivity crisis."

"This is feeding into increasing recruitment and retention challenges, particularly for employers in sectors that have historically relied on non-UK labour to fill roles and which are particularly vulnerable to the prospect of future changes to immigration policy for EU migrants," Davies said.

"With skills and labour shortages set to worsen further against the backdrop of rising talk of a 'no deal' outcome with the EU, the need for the government to issue consistent, categorical assurances about the status of current and future EU citizens, whatever the outcome of the negotiations, is more important now than ever."