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Tuesday, 6 May 2008

Jobs and the economy in 2008 - an update

It may seem like the slowdown in the world economy is not having an impact upon the jobs market in the UK. This is probably true for now, but this doesn't mean it won't.

The first people who are likely to lose their jobs in the current slowdown are those working for the big banks. Another big bank, UBS, announced 5,500 worldwide job cuts this morning. These jobs cuts will be made over the next year through a process of redundancies, fewer job created and natural wastage. All in all it is estimated that banking jobs and those jobs supporting the banking sector will fall by between 20,000 and 40,000 in central London alone.

Wider job losses are likely to follow soon after. The next groups to suffer will be those working in the housing market. With fewer housing transactions there will be less work for estate agents and house builders.

Next as the housing market slows and as the price of day to day living increases, people are likely to be spending less at the shops. Retailers have already started to see sales falling in March and probably in April. Some retailers will go bust and jobs will be lost.

Jobs will gradually be lost from the wider economy. As activity slows there will be less business to do and less need for additional staff. Tighter margins will mean that cost saving measures will be necessary for many businesses, including cutting headcounts.

One upside is that manufacturing may fair slightly better than it has done in the recent past. The weak pound should help to make British manufacturing more competitive, helping to support manufactured exports. However, with the world economy slowing and Britains export partners suffering this is not guarenteed.

Although the labour market has remained resilient in the first few months of 2008, expect to see unemployment start to rise in the next few months. We are not going to see unemployment levels at a level comparative to the early 90s, but it is going to be quite unpleasant for many.

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posted by Carl Malways at

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