Economic confidence brings solid gains for recruiters - City Comment
13 March 2014
The headline economic news just gets better and better. Inflation has finally dipped below 2%, a key target for the Bank of England, unemployment is falling steadily now and at its lowest since Q1 2009 while in January 2014, job vacancies reached their highest level since October 2008.
Thu, 13 Mar 2014 | Sue Dodd, director Agile IntelligenceThe headline economic news just gets better and better. Inflation has finally dipped below 2%, a key target for the Bank of England, unemployment is falling steadily now and at its lowest since Q1 2009 while in January 2014, job vacancies reached their highest level since October 2008.
Add to this the latest Reuters’ poll of over 50 economists which asserts that GDP will grow at 0.6% each quarter until September 2015, the fastest of all the G7 countries, thereby reaching its pre-crisis level by the end of June this year. This perhaps is now an unsurprising, albeit very welcome, achievement given this weight of positive news, forward looking business surveys and milestones already passed. From the same stable, economic growth is forecast at 2.7% this year and 2.4% in 2015 and 2016 – these figures are also consistent with the latest projections from the OECD.
Yet the damage incurred over the past five years or so has been substantial. Youth unemployment, real value of savings eroded as interest rates stayed below inflation, real household income squeeze and business investment down by close to 25% - there is a long list of consequences which are the direct result of suffering a US-led financial crisis followed by a sovereign debt crisis.
Correcting these problems, within public sector debt constraints, will be the real challenge over the coming years but the longer that interest rates remain low the better the chances of higher growth for the economy and higher potential tax returns. Meanwhile adding to that ‘to do’ list is the generally accepted need to encourage a shift in the balance towards more production output relative to services, while also encouraging a more export-led recovery and less dependence upon the soaring consumer spending of the past.
Enter centre stage, the Bank of England – the timing of an interest rate rise is crucial to the economic health of the UK. Too early and growth is stunted with consequences across the economy and increased regional imbalance; too late and the economy over-heats, debt spirals, a housing bubble may develop and we move into an inflationary cycle.
Mark Carney’s interest rate guidance has now been tailored but also expanded to include many more parameters – no longer now the crude 7% unemployment figure since we’re almost there years ahead of projections – and the consensus is that the base rate will not be increased much before mid-2015, although if economic recovery accelerates the Bank will need to be on the front foot.
As for recruiters? Recent results mainly reflect a modest upturn in selective sectors becoming a little more widespread as 2013 ended with permanent gains beginning to be seen alongside some temporary growth in fees. As economic confidence builds so will the confidence to hire staff, providing a more solid foundation in the year ahead than has been seen in several years past.
Add to this the latest Reuters’ poll of over 50 economists which asserts that GDP will grow at 0.6% each quarter until September 2015, the fastest of all the G7 countries, thereby reaching its pre-crisis level by the end of June this year. This perhaps is now an unsurprising, albeit very welcome, achievement given this weight of positive news, forward looking business surveys and milestones already passed. From the same stable, economic growth is forecast at 2.7% this year and 2.4% in 2015 and 2016 – these figures are also consistent with the latest projections from the OECD.
Yet the damage incurred over the past five years or so has been substantial. Youth unemployment, real value of savings eroded as interest rates stayed below inflation, real household income squeeze and business investment down by close to 25% - there is a long list of consequences which are the direct result of suffering a US-led financial crisis followed by a sovereign debt crisis.
Correcting these problems, within public sector debt constraints, will be the real challenge over the coming years but the longer that interest rates remain low the better the chances of higher growth for the economy and higher potential tax returns. Meanwhile adding to that ‘to do’ list is the generally accepted need to encourage a shift in the balance towards more production output relative to services, while also encouraging a more export-led recovery and less dependence upon the soaring consumer spending of the past.
Enter centre stage, the Bank of England – the timing of an interest rate rise is crucial to the economic health of the UK. Too early and growth is stunted with consequences across the economy and increased regional imbalance; too late and the economy over-heats, debt spirals, a housing bubble may develop and we move into an inflationary cycle.
Mark Carney’s interest rate guidance has now been tailored but also expanded to include many more parameters – no longer now the crude 7% unemployment figure since we’re almost there years ahead of projections – and the consensus is that the base rate will not be increased much before mid-2015, although if economic recovery accelerates the Bank will need to be on the front foot.
As for recruiters? Recent results mainly reflect a modest upturn in selective sectors becoming a little more widespread as 2013 ended with permanent gains beginning to be seen alongside some temporary growth in fees. As economic confidence builds so will the confidence to hire staff, providing a more solid foundation in the year ahead than has been seen in several years past.
