on the surface it would seem that the slowdown is not having
much of an impact on people’s day-to-day lives. Last week’s
financial market chaos would have been a big headache for those
working in the City of London or those with large share portfolios,
but that’s a minority of the country.
chaos should however start alarm bells ringing. It is not yet
clear how the current mess in the international financial markets
will play out, but if this turmoil continues then the cracks
in the economy could well become holes for jobs to fall through.
The financial crisis has exacerbated problem – few had
been predicted that the United States could potentially move
into recession until the events of last week.
unlikely that the UK will suffer as much as the US. There are
no credible analyst suggesting that the UK will enter a period
of recession, but as the economy is squeezed by higher interest
rates and as chaotic financial markets hit business confidence
there will be those that will lose their jobs.
possible group to see job losses will be those working in the
financial and business services sector in the City of London.
Initial estimates had suggested that job losses in the City
are likely to number a few thousand, but this number is likely
to be revised upwards. The impact of this will be relatively
limited to the London area.
sign to watch out for is a slowdown in consumer and business
spending. With the financial markets looking wobbly and with
higher debt repayments businesses will reduce their spending
on goods and services, and also on headcounts.
in the financial markets leads to uncertainty in the business
environment. Plans to invest will be hit as uncertainty increases
the risk that they may not be able to afford the repayments
in the future.
in consumer spending is likely to follow. Higher interest rates
will increase the cost of consumer debt repayments, primarily
mortgages. However, this is likely to have a limited impact
according to the Bank of England.
spending will also be constrained by the reduction in business
spending. As businesses reduce spending employment growth will
slow as will wage growth. With less money in their pockets the
consumer will stay at home, rather than spending on the high
spending less on goods and services, those that supply those
goods and services will have a reduction in turnover. With consumers
spending less on goods and services these suppliers will also
see reduced turnover. Lower turnover cause firms to fold or
reduce costs; inevitably job cuts will be part of this process.
will this all come to a head? Most analysts suggest that 2008
will be the crunch point when the various factors come together
to produce an economic slowdown. Expect to feel the pinch wherever
you work, there are unlikely to be many sectors that don’t
see an impact.
warning in hand I would suggest knuckling down and making sure
your boss realises that you’re indispensable, even when
business is bad! 2008 is going to be a tough year try to limit