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2010-04-27T23:45:00.001+01:00

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Misleading UK unemployment statistics

2010-03-18T17:08:00.000Z

The unemployment figures released yesterday provided mixed headlines this morning. Some of the press focused upon the fall in unemployment and 30,000 fewer people claiming unemployment benefit. These are good figures that provide some signs that the recession and the downturn are fading. However as always the devil is in the detail.

What the headlines don't tend to indicate is that although unemployment fell, so did the number of people in employment. Therefore the number of people working, earning and producing goods and services in the economy actually declined.

The two paragraphs above may seem inconsistent. They are not. The main reason that both unemployment and employment fell is that the total number of people in the labour market has been falling as the inactivity rate increased by 150,000 in the quarter and the number of overseas workers decline 100,000 in the year. The rise in the inacitivy rate was driven by a 100,000 increase in the number of people registered as students. Although this is preferable to redundancy, the majority of these students are not attending university or enrolling in rigorous higher education courses, many of these courses have been set up in the past year in the face of recession and are well known to provide little in the way of actual benefit to either the individual or wider society. A cynical person might even argue that these courses are a very useful political tool to keep down the official unemployment figures.

Finally the labour market stats also continue to show that it is the public sector that is creating the additional jobs, not the private sector. Given the necessity for the government to cut its deficit, this is a temporary solution, and likely to be reversed. Without a return of private sector jobs growth there will be no recovery in the labour market.

Its not all doom and gloom out there anymore and things are slowly getting better, but as ever it is easy to get carried away when misinterpreting monthly data!

http://www.statistics.gov.uk/cci/nugget.asp?id=12

UK Q4 2009 GDP revised up

2010-02-28T17:12:00.001Z

As expected the GDP was revised up to 0.3% in the final quarter of 2009 and could possibly be revised up further at the final reading. The second reading is based upon 60% of the data needed to make a complete reading, compared to 40% for the first reading and 80% at the final reading.

For further information see: http://www.statistics.gov.uk/cci/nugget.asp?id=192

It is interesting to note that 0.3% is within the forecast estimates given by economists before the first reading came out. When the preliminary reading was 0.1% (outside of the forecast range) commentators in the press were quick to belittle the economics profession and the forecasts, questioning their competency. I think it is probably time that economists questioned the competency of the press, who fail time and time again to understand statistics and their limitations.

Worse business investment puts Q4 GDP revision in doubt...

2010-02-25T22:10:00.001Z

Tomorrow's second reading of the Q4 GDP figure has been widely expected to show that the UK emerged from recession at a quicker pace than the 0.1% originally shown in the preliminary reading.

Although analysts weren't expected a dramatic change in the number, a reading of around 0.2% or 0.3% would have given them more comfort for the outlook of the recovery.

However, the likelihood of tomorrow's second reading showing an upwards revision was put in doubt today by news from the Office of National Statistics (ONS) showing business investment falling sharply in the final quarter of the year. According to the Preliminary reading of business investment in Q4 2009, investment fell 5.8%, compared to a fall of 1.8% in Q3 2009.

Again a health warning must be placed on these figures as they are only preliminary readings and therefore are highly likely to be changed.

For more information: http://www.statistics.gov.uk/pdfdir/bi0210.pdf

There remains a good possibility that GDP will be revised up tomorrow. Nevertheless these figures suggest that business was not yet confident enough to spend money in the final months of 2009 and were hoarding their cash in anticipation of things continuing to be bumpy in 2010.

Retailer performance, don’t be fooled by the statistics

2010-02-03T21:44:00.000Z

Statistics are a funny thing as they can misinform just as much as they inform. As David Brent in The Office said “Statistics are like a lamp-post to a drunken man - more for leaning on than illumination.”

Although as an economist I think this is a bit of an exaggeration but it is certainly true that statistics are not always as they seem. Nowhere is this truer than the economic statistics produced by the Office of National Statistics. I am not diminishing the efforts of the ONS, who in my opinion do a fantastic job and are far better than most other national statistical bodies in this world.

It is the interpretation of their statistics that leaves much to be desired. Commentators are all too willing to take monthly figures released by the ONS and other bodies and use them as direct evidence to support one theory, one forecast or one inclination. In fact monthly data is almost always revised in the following months as new evidence emerges. The monthly data is also highly sensitive to various events that occurred that month which are completely unrelated to the wider economic picture. Looking at longer term trends is a much more satisfactory way of interpreting data, even though they possibly lack the spontaneity that a new release provides.

Therefore I am going to comment upon the retail market in December, whilst attempting to avoid the trap of drawing a conclusion from just one month’s evidence.

I am writing this article before the official December retail sales figures have been released, which will be published next week. However given survey evidence and retailer announcements it is clear that the December figures are very likely to show sales increasing sharply compared to December 2008.

So clearly everything is getting better for retailers, right? People are flocking back to the shops and spending their money, right? A great Christmas on the high street is a sign of a great year ahead, right? Possibly, but probably not. As mentioned at the beginning of this article, don’t be misled by one month’s data.

It must be remembered that the sales data for December 2009 will be compared against the distinctly different retail environment of December 2008. This time last year it seemed for many that the world financial system was in free fall with unknown and possibly cataclysmic consequences. Christmas 2008 came very shortly after the collapse of both business and consumer confidence.

December 2008 followed months of sharp falls in retail sales, forcing the government to cut VAT to help stimulate demand. December 2009 came just before a VAT increase. The 2008 cut did not have as big an immediate impact because it provided a year’s window of lower prices, whereas in December 2009 people were rushing to take advantage before that window closed. Therefore when we see retail sales figures showing a large annual increase in month on month retail sales, this is overstating the strength of Christmas 2009.

This is not to be too downbeat. The signs are that December 2009 in itself was better than expected. Some of the retail sales figures released by major stores have seen higher growth than can be attributed just to a relative weakness in the previous year. It is indeed possible that some consumers have decided to spend some of the savings they have built up in the previous six months or took advantage of lower mortgage repayment costs, due to the cuts in interest rates by the Bank of England, to go out and enjoy Christmas.

One should however avoid euphoria. A large rise in sales is excellent but it must be seen in context of sharp falls of a similar magnitude in the previous year, as well as the possibility that temporary factors boosted sales this Christmas, whilst continued weakness of employment and wage growth could depress sales further through 2010.

Inflation

2010-01-20T23:47:00.001Z

Up to 2.9%. No worry about interest rates just yet.

The Long Road to Normality – Retailing in 2010

2009-12-28T18:49:00.001Z

Having been through the most traumatic of years it is easy to believe that the worst is over and that 2010 will be uneventful and perhaps even boring. Nothing could be further from the truth. The outlook for 2010 is one of highs and lows, success and failures. Nowhere will this be more obvious than on the high street.

These are the possible highlights of the retail environment in 2010.

December 2009

Despite retail sales falling back in November, sales pick up in December on signs of the recession ending and increased big ticket items purchases before the January VAT hike. Compared to very weak sales turnover data in December 2008, the annual figures show a sharp improvement, masking continued weaknesses within the retail sector.

January 2010

Signs of retailer problems are starting to emerge. Some retail businesses have not benefited from a pick up in sales and are forced to move into administration.

February 2010

Gloom returns to retail as administrations continue and the impact of VAT hikes weigh upon consumer confidence and their willingness to spend. Global equity markets have started to flatten as investment markets question the strength of the recovery. Optimism is fading and retail sales are starting to suffer.

March 2010

Consumers face the distraction of a close and bitterly fought general election. Messages of both hope and austerity confuse retail expectations. The Conservative Party is elected with a small majority, ensuring a workable political environment.

April 2010

An initial boost of optimism following the changing of government gives a temporary lift to retailing.

May 2010

The Conservative Party’s “Emergency” budget and planned tax hikes start to have an impact, taking the shine off the new government. An announcement of substantial cuts to public sector spending and pay freezes increases the prospect of industrial actions. Public sector employees, who have been so far largely isolated from the downturn, start to feel the impact of the recession.

June 2010

The World Cup provides a temporary distraction, as sales of football merchandise; memorabilia and high definition televisions all support higher retail sales.

July 2010

There is mixed economic news. The global economic recovery is regaining pace after a second quarter lull. However, signs of future interest rate hikes in the UK, USA and Euro zone, raise concerns for mortgage holders.

August 2010

A long hot summer increases social tensions. The threat of public sector strikes starts to increase. The disruption is short lived as public sympathy is not forthcoming.

September 2010

Investors return from their summer holidays with a renewed sense of optimism. The private sector is growing in confidence as the recovery starts to build up steam. Unemployment is beginning to fall as private sector job creation compensates for public sector job losses.

October 2010

Rising consumer confidence and lower unemployment is slow to translate into higher retail sales. Cautious spending habits expected to remain for some time. Shops in South Wales benefit from the Ryder Cup, whilst retailers enjoy a weekend Halloween.

November 2010

The first base rate rise by the Bank of England is unwelcome news for home owners, but also provides a positive signs that the economy continues to take tentative steps back to normality.

December 2010

Solid Christmas sales figures but without a significant increase on December 2009. It has been a long year with many ups and downs but most retailers are happy in the knowledge that the worst is over, the economy is growing, unemployment is falling and things are very gradually moving towards normality.

Carl Malways (economist) – writing for The Retail Database

The Retail Database lists the details of all major shopping destinations in the United Kingdom, providing a reference point for everyone interest in retail, from those looking for a place to shop to retailers researching possible store locations.

Manufacturing output and industry jobs

2009-08-04T20:18:00.002+01:00

The CIPS Purchase Managers Index (PMI) was released today, recording a figure of 50.8 in July, up from 47.4 in the previous month. With the PMI index rising above 50 the manufacturing sector is now showing signs that it is starting to grow again, although at a very modest pace.

The manufacturing sector joins the services sector in returning to growth, which recorded results above 50 in both May and June and is forecast to expand again in July.

This should be seen as a positive sign that the economy is now past the worst of the economic downturn and is slowly returning to growth. However, at just above the 50 mark the data is not showing a rapid rebound in activity but a very modest increase in activity. Given that the economy has so far shrunk nearly 6% since the end of the first quarter in 2008, it will take either much stronger growth than this or a very long time indeed to return the economy to where it was in early 2008.

Recent data has also revealed that employment expectations in the manufacturing sector are starting to improve. This is not to say that employment in the sector is expected to grow in coming months, but the rate at which it is falling is set to slow.

Manufacturing in the UK has lost around 150,000 jobs since the start of this economic downturn, but it should be remembered that the sector is in a process of long-term decline. The sector lost jobs throughout the boom years of this decade and since 1980 has seen total employment fall by over 40%.

On the whole, today’s result should be seen as a positive but tentative sign that the economy is starting to improve. The economic environment remains fragile and a smooth transition to normal conditions is unlikely. Nevertheless, should this trend continue, the economic outlook could be better than many economists have been forecasting.

UK Q2 GDP results fall short of expectations

2009-07-24T15:16:00.001+01:00

Preliminary GDP data for the UK came in well below analyst expectations today, falling by 0.8% in the second quarter of 2009. Analysts had expected a fall smaller decline of just 0.3%.

It should be remembered that these preliminary estimates do have a habit of being substantially revised before they are finalised, however the magnitude of this fall should be enough to temper some of the more extreme claims that the recession ended some time back in May.

Don't get me wrong, there are signs that the recession is starting to moderate. The 0.8% GDP decline is nothing compared to the 2.4% seen in the first quarter of the year and recent indicators have pointed to continued improvement. However, pulling out of this recession is going to be a long process, and unfortunately a rather painful one. For one unemployment is up by more than 700,000 since the start of 2008 and will continue to rise, even when the economy starts to grow again.

These GDP figures are also lower than the last budget predicted and will mean that the government is highly unlikely to meet its fiscal forecasts. As a result taxes are highly likely to rise and the public sector is likely to experience cuts in funding. This will inevitably mean that jobs will be lost in the public sector, further forcing up employment and destroying one of the last bastions of secure employment.

A probable turn in the inventory cycle as manufacturing businesses, having run down their stocks, restart production and recent economic indicators suggest that the UK economy may return to positive economic growth as early as the third or fourth quarter of 2009. This is indeed possible. However, the road to recovery will not be smooth. The unwinding of fiscal imbalances, a return to a normal interest rate environment and the withdrawal of quantitative easing will be difficult, threatening recovery.

Whatever shape you think the recovery will take one thing is for sure, it will not be easy!

Jobs and unemployment in 2009

2009-02-09T22:20:00.003Z

According to the CIPD/KPMG survey of employers' the jobs market in the UK is getting rapidly worse. This should not come as too much of a surprise.

It should be remembered though that this survey is now a bit historic and was undertaken in a period of particularly bad economic and financial market news. I would suggest that this news is slightly redundant (excuse the pun) and we should look to more recent indicators as a better reflection of what is going on.

The survey asks respondents their plans for recruitment and redundancies in the first quarter of 2009. It seems strange to me then that they would release this information on 9 February when we are already half way through the quarter.

"The latest quarterly CIPD/KPMG survey of employers’ recruitment and redundancy plans indicates that UK job prospects are deteriorating ‘at an alarming rate’ while the size of average pay rises is shrinking.

The winter Labour Market Outlook (LMO) survey of 892 UK employers, conducted by Ipsos Mori at the turn of the year, finds that more than one in three (36%) plan to cut jobs in the first quarter of 2009 – double the proportion expecting to make job cuts at the time of the previous LMO survey last autumn.

The LMO records a negative balance of -9 percentage points between the proportion of employers planning to cut jobs (36%) and the proportion planning to hire additional staff (27%). This is the first such negative balance recorded in the five years since the LMO survey began in 2004.

The latest LMO survey also finds that employers intend to keep a much tighter rein on pay increases in the coming months. Those who plan pay reviews expect staff pay to increase on average by 2.6%, much lower than the 3.5% average increase expected last autumn. But as many as one in eight employers don’t intend to conduct a pay review at all in 2009."

Source: www.cipd.co.uk

Glimmers of hope as global recession deepens

2009-02-07T13:29:00.001Z

Unemployment continues to grow across the globe, with no countries remains unaffected by the global recession. In the Unites States the unemployment rate reached 7.2 per cent in December, its highest level since 1992. This followed a loss of almost 600,000 jobs in the month, the largest drop in over thirty years. Unemployment will continue to rise in most countries for the majority of 2009.

Nevertheless for the first time in quite a few months the latest economic data has started to show some glimmers of hope. This is not to say that there has been a dramatic improvement in the global economy, but there are perhaps some signs that the rate of economic contraction is decelerating. Although this means that the economy is still shrinking it could be the first steps towards reaching a trough.

Earlier this week the Purchase Manager Indices (PMI) figures for manufacturing and services showed an improved economic environment in both the UK and Europe. It showed that manufactures were benefiting from lower input prices, whilst those in the UK were starting to be helped by the rapid weakening of the pound. Services in the UK and Europe were also buoyed as lower interest rates and government intervention increased the outlook for the sector.

Later in the week the US ISM survey of non-manufacturing businesses improved for the second month in a row. It indicated that business conditions were improving, despite new orders continuing to fall. The US PMI manufacturing survey also increased in the month. Again both indices were improved but implied further economic contraction.

It should be remembered that these figures are indicating changes in the month, and therefore it is dangerous to read too much into them. It should also be noted that the employment parts of these surveys continue to deteriorate, representing an acceleration of unemployment.

Nevertheless the stage is being set for what will be a long crawl back to positive economic growth. Inflation continues to fall in Europe and the US, giving policy makers the room to cut interest rates further or to use monetary stimuli such as quantitative easing. Falling inflation will also help to boost real incomes, whilst reducing the attractiveness of savings, providing a much needed boost to consumer spending.

On top of this, lower interest rates and rising unemployment will provide benefits to business. Although, banks remain unwilling or unable to increase lending to businesses, there are early signs that the bond market is starting to re-open (although at a high price), whilst some bank facilities have become significantly less expensive. In addition, being able to cut jobs has enabled some companies to reduce costs, increase productivity and adapt to the changing business environment.

A return to normal economic conditions remain a long way away, even positive quarterly economic growth is unlikely in a number of countries until 2010. However, should the latest economic indices continue to improve then perhaps we are seeing a light at the end of the tunnel. The tunnel is likely to be quite long, but now could be the best time to start preparing for the upturn.

When will the global recession end?

2009-01-24T13:44:00.007Z

It came as no surprise yesterday that the UK is now officially in a recession. With the economy shrinking in the third quarter of the year, the economy certainly hadn't improved in the final three months of the year. The economy contracted by 1.5% in the final quarter of the year, having shrank 0.6% in the third quarter.

These figures confirmed that despite the government's attempts to stimulate the economy through measures such as a cut to VAT and capital injections into the banks, and the Bank of England's historic interest rate cuts, the economy shrank at an accelerated pace.

Like the USA, Japan and the eurozone, which were confirmed as in recession at the end of the third quarter, the UK is now officially in recession, and is unlikely to emerge from recession for some time.

Historically recessions tend to last about fifteen months, but given the global nature of this recession and the severity of the economic imbalances in the UK this recession could last longer. It will almost certainly be longer before the UK returns to its natural rate of economic growth (approximately 2.5% per annum).

Given that the USA is further through its recessionary cycle than other economies, it is likely that they will emerge from their recession before other parts of the world. The country also has the capacity to spend its way out of this recession. Given the massive fiscal stimulus planned by the new Obama administration, this could pull the US out of recession by the middle of 2009.

Increased optimism following the election of President Obama should also help to stimulate the economy as consumers feel positive enough to spend and businesses prepare for an upturn. This break from the old could have a significant impact on the economy.

The eurozone and Japan are likely to follow the United States. Once the US starts to grow again global demand and global confidence is likely to improve. Japan and eurozone countries like Germany rely heavily upon exports and therefore global demand is fundamental in their economic revival.

These countries also benefit from having less consumer debt and fewer economic imbalances (e.g. house price over valuation) than countries such as the UK and USA. Therefore the downwards economic cycle should have less corrections to make before stability returns. Less personal debt and higher savings will mean that consumers in places such as France and Germany will be able to benefit from falling prices, prompting an increase in consumption that will aid the recovery.

The UK is likely to be one of the last developed countries to come out of the global downturn. It faces a number of problems that will prolong the correction in the economy. For one the UK economy relies heavily upon global finance as a proportion of GDP and as an employer. Therefore with this sector in chaos the economy has been hit hard.

Secondly UK households do not have a massive amount of savings to protect themselves through the economic slowdown. Having spent heavily and saved little in previous years the UK consumer is likely to sharply cut consumption in order to build up protective savings. This will reduce retail spending, a key part of the economy.

Third, with the UK government attempting to support the banking sector it has built up a massive debt. Like the UK consumer the British government did not save in the good years and therefore does not have a surplus available to add much extra stimulus to the economy.

Finally, UK house prices were some of the most over valued in the developed world and as a result will need to fall further than in other countries. This will again weigh on consumer confidence and will also hit bank balance sheets.

This is not to say that the UK will be in permanent decline. The rapid weakening of the pound will stimulate exports from the UK. This will take some time to occur as the world economy slows and as international importers adjust their supply chain to the UK.

The UK also benefits from a highly skilled and flexible labour market. Unlike some European countries the UK's labour laws encourage the use of temporary workers and place less barriers to employment. They also allow employees to be sacked or made redundant more easily. Although not a great thing if you are one of the people losing their job, but it will mean that British businesses can reorganise and cut costs more quickly and cheaply than other countries.

Finally the Bank of England has cut interest rates quickly and will continue to cut to near zero. Along with quantitative easing ("printing money") this will act as a further stimulus.

In all these countries, particularly the USA and the UK, the way out of recession will require the banking system to move back to some sense of normality. This is not going to be easy and could be some way off. Without it though, businesses will continue to be unable to borrow and therefore invest and consumers will be unable to get mortgages or loans to buy houses, consumer or start entrepreneurial activities.

So as it stands here are my forecasts for when recession will end (i.e. first quarter of positive growth):

USA - Q3 2009

eurozone - Q4 2009

Japan - Q4 2009

UK - Q1 2010

Jobs news summary for the week

2009-01-11T19:54:00.004Z

UK governments plan to create more internships - The UK government is planning on giving unemployed graduates three month paid internships as a way of increasing skills, work experience and reducing unemployment.

Banks keen to employ graduates - Banks are keen to continue to employ the best young graduates whilst continuing to cut the jobs of more experienced staff. Graduates are proving attractive to banks as a cheap source of labour that will be available and ready for when the markets recover.

Help for long term jobless - The UK government announces plans to tackle long-term jobless, i.e. those unemployed for over six months. Unlikely to be a significant change in policy as tackling long-term unemployment has been a stated goal of the government since 1997.

Obama jobs stimulus plan - It is estimated that Obama's fiscal stimulus could create four million new jobs. It is hard to see how this figure has been calculated and will almost certainly be way off.

US unemployment increases to 7.2%, half million jobs lost in December - US unemployment surged to a 16-year high of 7.2 percent as a deepening recession pushed employers to shed a massive 524,000 jobs in December, capping a yearly loss of 2.6 million, data showed Friday.

Employee demand falling at a record pace

2009-01-07T22:34:00.008Z

A report published today by the Recruitment and Employment Confederation (REC) and KPMG showed a sizable weakening in the labour market and the demand for employees.

According to the press release that accompanied the report...

...For the third consecutive month, recruitment consultants reported declines in permanent and temporary staff pay during December. Anecdotal evidence suggested that rapidly rising levels of staff availability had diluted candidates’ bargaining power.

Reflective of recent redundancies and fewer job opportunities, the availability of staff to fill vacancies continued to rise substantially in December. The latest improvements in permanent and temporary staff availability were the strongest since the inception of the survey in October 1997.

Kevin Green, Chief Executive of the REC, said:“These figures are deeply worrying and show that the contraction in the labour market is now rapidly accelerating. The decline in both permanent and temporary appointments in December is the sharpest recorded since the survey began in 1997.

“At a time when the Government is proposing job creation measures, the REC will be seeking urgent meetings with the Government about its proposed removal of the VAT concession in April. This change could help retain 150,000 temporary jobs at a time when we should all be working together to create employment opportunities, not taxing them out of existence."

Mike Stevens, Partner and Head of Business Services at KPMG, added: “These latest figures only serve to confirm the most pessimistic projections for the UK jobs market. They are also a lead indicator for a rapidly declining employment situation which is not yet reflected in the government's current employment statistics. One reason for this is that employment legislation – enacted since the last recession – tends to defer the incidence of job losses pending completion of consultation periods."

More job losses on UK high street...

2009-01-07T22:09:00.004Z

It’s not just those small companies or those that were already on the way down that are suffering at the moment. M&S announced today that they will be shedding 1,230 jobs in the UK and closing 27 of its small food stores.

It is not too surprising that M&S has been forced to make these cuts. The signs seemed pretty obvious well before today, as they announced 20% sale after 20% sale in the weeks running up to Christmas. Although the shops were packed on those sale days, it was a terrible indication of the state of the business.

This has not been a good week for those working in the retail industry...and its only Wednesday. On Monday Adams, which fell into administration after Christmas, cut another 850 staff, while Passion for Perfume collapsed leaving 185 people jobless. Whilst just today the womenswear company Viyella called in the administrators, putting at risk another 450 jobs.

Things are only going to get worse on the high street in the next few weeks and months. It seems now seems even more important than ever that the government stops playing politics with policies such as VAT cuts, and focuses upon the problems in hand. First step for retailers, get the credit insurance market working asap.

US job losses highest since end of WWII

2009-01-05T21:04:00.003Z

Friday sees the release of the US Labor Department's monthly jobs data which is likely to show that the number of jobs lost in in the US during 2008 was the highest since 1945.

According to the median estimate of economists surveyed by Bloomberg an additional 500,000 jobs were lost in December, resulting in a cumulative reduction in headcount of 2.4 million in the year.

Despite Barack Obama's grand plan for an extensive fiscal stimulus, the US economy will continue to slash jobs throughout at least the first half of 2009 and for possibly longer.

The unemployment rate, which stood at 6.7% in November, is likely to have climbed to 7% in December, the highest level since 1993. It would not be surprising to see this figure edge towards double digit figures especially if the fiscal stimulus and cuts to interest rates don't have the desired effect.

Graduate recruitment - Banks becoming more selective

2009-01-04T19:18:00.006Z

Graduates looking for work as an investment banker or other highly paid jobs in financial firms will find it increasingly difficult to find the jobs they want if they are not attending some of the most high profile universities in the UK and the rest of the world.

According to an article in the Financial Times banking and financial institutions are slimming down their recruitment process, focusing upon a select number of universities.

In the past these firms would attend recruitment fairs and hold special recruitment sessions in at least the top twenty (Russell Group) universities in the UK. They would also target graduates in other universities with highly recognised finance and economic departments.

However, with fewer jobs to offer, smaller recruitment budgets and less competition for the best candidates, financial firms have dramatically cut back on their recruitment activities in those universities that they do not consider to be the best in the country. As a result those candidates in even some of the best universities in the UK have a significantly reduced chance of gaining employment in the sector.

The Financial Times identified the following universities as the places to be if you wish to gain employment in the financial sector:

Places to be:

● Inner circle (where most banks are searching for recruits)

Oxford

Cambridge

Imperial College London

● Outer circle (where some banks are recruiting)

London School of Economics

University College London

Warwick University

This is not to say that you can't get a job as an investment banker if you are graduating from somewhere else, however you are unlikely to be directly targeted by the bank and are starting one step behind.

FT article: Banking graduate recruitment

UK Treasury further recapitalisation of banks

2009-01-04T00:05:00.005Z

Sources close to the UK Chancellor, Alistair Darling, have suggested that he is considering further measures to boost the banking and financial system in the UK. This gives a clear indication that although we have had a bit of a end of year lull, there remain many problems within the financial system.

One key problem is that banks have yet to start lending at a sizable enough level to support business activity.

It has been suggested that the Chancellor will set up a fund to buy toxic assets from banks or exchanged for government bonds. This should help to provide a boost in confidence as the concerns about the balance sheets of other banks and financial institutions are nullified by the government effectively taking away risk.

If these measures do happen, it will be good to see the Chancellor taking a pro-active approach in helping to boost the economy. This will be a useful and practical step which will have real benefits to the whole economy, unlike the costly and pointless cut in VAT.

Economic outlook 2009 - many different view points

2009-01-02T01:54:00.005Z

An article released yesterday in the Financial Times shows the extent of the economic uncertainty that exists at the moment.

The paper sent a survey to leading UK economists asking broad questions about the outlook for the economy, employment, house prices, government spending etc.

The paper printed the responses from the various experts, and in typical economist fashion they came up with very different views for the economy.

For example, when asked whether 2009 would show the first "green shoots" of recovery in the economy, there was an almost even split between those answering yes and those answering no. Looking closer at the responses given the reasons for the responses were also very different.

Often the survey also seemed to suggest different interpretations of various economic terms led to different survey responses. For example, some respondents defined economic recovery as recording positive growth and others thought it meant seeing a return of trend growth. These are significantly different with the later being much harder to achieve.

This article has helped to confirm that we are entering a very uncertain time. I remain hopeful that we will see the first signs of recovery before the end of the year, but so much could happen to put this out of reach.

You may have to register with the FT web site (for free) but its worth having a read of this article.

Personal lessons from 2008

2008-12-31T16:47:00.007Z

This year has been one where the word "unprecedented" has been banded about more than I care to remember. Indeed, in recent history this year has been unprecedented, however, over the course of human history or even the last century I think things have been overblown. Commentators and press columnists have both a very short memory and a desire to exaggerate. Yes things are bad, but they have been bad before and we have got through them.

But lessons can and should be learnt from the turmoil of 2008. I'm not talking about lessons for the government or financial system. Clearly there are plenty of lessons to be learnt here and things will have to change. But there are also personal lessons in the way we conduct our lives and see the world.

Here are a few that I'll be taking away with me:

- Pay little notice of forecasts made for more than a year. The difference between the forecasts made at the end of 2007 and the out turn from 2008 has been so large that forecasting the economy has lost a lot of meaning. I find it more useful to concentrate upon the current state of economies and the general outlook over the future.

- Laugh in the face of anyone who tells you that something is obvious or a dead cert. So many people I have talked to over the last couple of years have banged on about the property market and how it was easy to make money. With the market likely to fall around 30% from peak to trough many are now struggling having fallen into negative equity and overextended themselves on their mortgage. Never trust anyone that says "You'll always make money", its either a scam or a sure sign that the market is overheated.

- Plan more for the future. In the recent boom years it has been easy to live for the moment. Saving nothing and forgetting the grand plan. It has been easy to move up the career ladder and simple to get pay increases. However, it should be remembered that the economy is fragile and can turn very quickly. You'll need a Plan B when this happens.

- Hard work and education pays off. The boom times were easy for many people to get by doing the minimum at work. It often seemed to some that a little bit of a loud mouth and a sociable nature would get you further than hard work. Looking at my friends who have lost their jobs and those that are still in work, I would suggest that when things get tough those people who haven't worked hard and don't have their qualifications will be the first to be identified for the chop.

- You can still change jobs in a recession. Although companies are making many people redundant there continues to be churn within the economy as people move company and people retire. Therefore you should not see recession as a time where you have to stay at your current job. You can still climb the ladder even in the bad times...its riskier but higher risks tend to come with higher rewards.

- As bad as it gets...it will get better.

It has been a long hard year but there has been plenty of lessons for everyone. These are lessons for life, that will make you a better person and employee throughout the next lot of boom and the bust.

Job security and earnings saps confidence

2008-12-30T17:28:00.012Z

Consumer confidence in the US fell to a record low in the US in December signalling that the economy has a long way to go before the economy starts to improve. Historically an upswing in consumer confidence has lead general economic revival by about twelve months.

Even though retailers are slashing prices and oil prices have fallen by over 70% from their peak, consumers are becoming increasingly worried about the outlook for their jobs and incomes.

According to the Conference Board, respondents saying jobs were "hard to get" was 42% in December - up by five percentage points from November, whilst those claiming jobs were "plentiful" dropped to 6.2% from 8.7%.

The level of consumers expecting increased incomes fell to 12.7% in December down from 13.1% in November.

Economic realities have started to bite, forcing consumers to accept the realities that although prices are falling, without a job or with falling incomes lower prices will make little difference.

An upswing in the US economy will lead the upswing in the world economy, it seems like this is still some way off.

Fairer, more balanced economy

2008-12-30T16:38:00.008Z

Yesterday the Chartered Institute of Personnel and Development forecast that 600,000 jobs could be lost in the UK next year. This made plenty of headlines but isn't the worst forecast out there at the moment as a number of forecasting houses have already suggested that job losses could be closer to one million.

Once again these forecasts are pure speculation. Given that the economic downturn in 2009 is unlikely to be similar to anything that has occurred in the past twenty years, basing these predictions upon previous economic cycles is likely to be erroneous.

Nevertheless, whether this forecast is too low or too high, the one thing that is clear is that jobs will be lost in their hundreds of thousands over the next twelve months. Even with the errors associated with forecasting, this can be quite safely assumed.

Brendan Barber, head of the TUC, has acknowledged that 2009 is going to be a very tough year. He has taken a highly sensible approach to the recession, blaming the financial sector for the mess that we're in (probably a little over simplistic) but also stating that the government should continue to support banks and the financial system.

It is good to see the trade unions acknowledging the extent of the problems and taking a proactive stance for the benefit of the nation. Often trade unions have tended to think about their members first and the national economy second. With the whole nation in now entering recession they have put differences aside in the hope of making the recession as shallow and as short as possible.

If the trade unions can accept that many of the their members will face redundancy and / or pay cuts over the coming twelve months then they will be a key part in making this recession less painful.

Brendan Barber also called upon the government to make the economy more "fair and balanced". The word "fair" is rather loaded and means different things to different people. In the eyes of the trade unions I would imagine this would mean higher taxes on the wealthy. Although this wasn't stated by Barber I this seems to be the natural conclusion from the statement. However in a world of global competition this would be a poor idea. If by fairness he means an increase in social mobility, and an improvement in meritocracy then this is something many would approve of, something that would increase economic efficiency without the necessity to increase taxes and penalise success.

The argument for a more balanced economy is not that valid. It is true that the economy does have a large number of jobs in the financial sector, that account for a large amount of the nations wealth. Nevertheless, looking at the census figures, the majority of people are not working in financial services. Manufacturing continues to employ people in the millions and plenty of people work in construction, retail, government services etc.

Also the UK has a specialism in financial services. A combination of geographic location, established institutions and a stable political and economic environment has made London (and to a lesser extent Edinburgh) places of global financial dominance. As a result these centres can conduct specialised business demanded by the rest of the world, and as a result these businesses can command high fees. The UK does not have the infrastructure or skills base to be a major specialist in manufacturing.

A free and open economy has chosen to make London a global financial centre, and for UK manufacturing to shrink to smaller, more niche businesses. If the government attempts to artificially balance the economy it will lead to an inefficient distribution of capital and labour. The economy will be worse off as a result.

Pay cut or job loss

2008-12-28T23:03:00.003Z

The British Chamber of Commerce has asked the UK government to keep the national minimum wage on hold in 2009 to help businesses to cope with the current economic downturn.

Whether the government keeps the minimum wage on hold or not will not stop wages in the private sector remaining on hold or falling in 2009.

Some businesses, particularly those in the financial sector, have already started to cut wages. In this sector salary cuts of between ten and twenty per cent throughout the company won't be too unusual.

But pay freezes and pay cuts of a smaller magnitude should be expected across all sectors apart from the public sector. Given that those in work receiving the pay cuts will be paying for these public sector pay rises, there may be increased calls for the public sector to also cut back on staff or salaries.

A pay cut may seem like a terrible burden and terribly unfair. Nevertheless, this should be seen as a good thing. In previous years when unions were stronger and labour markets less flexible a pay cut would have been unheard of. As a result some companies were either forced to cut jobs or go out of business.

The ability to cut wages instead of cutting jobs will help to keep businesses going and people in work. These people will be able to retain and grow their skills whilst at work instead of stagnating. Businesses will not have to face the costly burden of redundancy and rehiring and they will have the available staff to take advantage of opportunities that arise. The government will have less unemployment benefits to pay.

A flexible labour market is one of the greatest assets that the UK and US economies have and will be one of the things that will help to pull the economy out of recession and see higher growth over the long term.

It is best to look at this way...what would you rather a twenty per cent pay cut or no job at all?

Worst performance in a job interview

2008-12-28T12:55:00.003Z

I read this in the Independent on Sunday and thought I would share it, as it is a fantastic example of a poor job interview technique.

"...the man who, receiving a mobile phone call, asked the interviewer to leave because it was a "private call"; the man who told the interviewer he had been sacked from his last post for beating up the boss; the candidate who sniffed his armpits as he walked into the interview room; and the person going for an accountancy job who told the interviewer: "I'm a people person, not a numbers person." But the winner is the American who, during a telephone job interview, flushed the toilet."

Try not to make these mistakes in the New Year...but if you do we'd be happy to hear about them.

Christmas shopping and the future of retail jobs

2008-12-28T12:40:00.003Z

If you work in retail at the moment then you should be concerned about your job. Even though some stores are recording brisk trading in London and New York, it is unlikely to be enough to save a number of retailers. Without credit insurance and shoppers being increasingly selective in how much and where they spend, those shops already on the wane are likely to come unstuck.

As a result a number of stores have already announced that they are already in trouble and could be closing their doors in the next few months.

Today Adams a childrens' clothing retailer announced that they have been taking into administration, thretening 2,000 jobs worldwide.

There will be more to come in the new year. Expect the collapse of retailers to accelerate in the coming 30 days.