Recruitment firms will have to consider reducing their own hiring budgets and curtailing expansion plans after the UK’s decision to exit the European Union added to an already dire trend of cuts to available bank overdraft funds for the sector.

Research by business finance matchmaker Funding Options has found that recruitment firms have seen overdrafts cut by more than one third to £196m from £313m over the last five years. This has added to early signs post-Brexit that firms are considering hiring freezes or reducing hiring budgets. 

Banks, still reeling from the core capital requirements imposed on them after the global financial meltdown of 2008, have been forced to reduce their exposure to high-risk sectors, such as the recruitment sector.  

The banks’ decision is based on what they consider to be inconsistent cashflow – with an average wait of 56 days for payment from clients compared with national average of 21 days – within the recruitment sector.