City Comment: Time to look forward, not back
Fri, 4 May 2012 | By Sue Dodd, director, Agile Intelligence
It is more than four years on now from the banking crisis yet we are still arguing about who did or didn’t do what, as though we were in the school playground. Isn’t it about time that we just accepted where we stand, stop trying to play the blame game and got on with the task of recovery?
The Bank of England Governor just recently offered his analysis, including blaming the Bank itself and poor regulation. Globally it may be a challenge to produce effective regulation but the long-term fallout from this crisis coupled with the sovereign debt issues in the Eurozone demand that we address all the issues urgently. Shortage of finance for SMEs continues to choke growth potential. So, apart from this what else is holding back UK recovery?
On the economy, the Eurozone is an ongoing crisis – social unrest may wax and wane but the debt problems will definitely be re-visited by the financial markets. Any period of calm should be used to shore up defences and, whilst economic projections for the UK have to assume the status quo, a Eurozone break-up with all its consequences remains a possibility.
Back to the UK, following last month’s disappointing Q1 GDP figures some perspective on a brief double-dip recession is needed with the media impact more dangerous than the event itself especially since there are still two more revisions due and these figures were also seriously dragged down by poor construction data. The real key to recovery is business confidence, best indicated by surveys and investment levels. The Q4 3.3% reversal in investment occurred amidst deep concerns surrounding the Eurozone – Q1 should begin to provide more normal readings. However, the economic news really is a mix of positives and negatives. Retail sales remain sluggish, government spending is under long-term constraints but private sector growth is just being seen in Services, whilst Manufacturing has so far weathered the Eurozone storm remarkably well. Inflation, despite oil prices, seems relatively benign. Unemployment has even retreated slightly. What does all this mean for recruitment?
Recent results confirm diverse fortunes with companies such as Hudson in the UK suffering from the Q1 financials slowdown while sectors such as engineering see expansion. Reports from some multi-nationals that performance improved as Q1 progressed, although perhaps company centric, could be signs that the sharp increase in temporary employees in the UK is once again driving recruitment sales if not forward yet then less quickly backwards. Nevertheless it will continue to be a slow, often painful and bumpy economic recovery and this will be mirrored in recruitment. Strategic positioning will mean everything.
Sue Dodd, director, Agile Intelligence