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On the surface all is l oking very rosy for the UK l bour market if you’re looking for a j b. Despite a huge inflow of m grant workers since the enlargement of the E ropean Union the number of people cl iming unemployment benefit has consistently remained b low the one million mark in the l st two years and has fallen by ver 100,000 in 2007. Nevertheless cracks are st rting to show in the economy. Int rest rates have risen five times s nce July 2006 and are likely to r se one more time by the end of the y ar. Higher interest rates are likely to hit b th consumers and businesses alike as d bt repayments become even more of a str tch. It should be noted that ncreases in interest rates take about a y ar to feed through to the conomy so get ready for last y ars rate rises to start to h t! Other weaknesses are showing. The sl wdown in the US economy has b en going on for most of the y ar without major consequences for the UK. The r covery in the major EU countries has h lped to buffer the reduction in US d mand for UK exports. However, the EU r covery is starting to look short-lived. The It lian economy posted very weak growth f gures in the second quarter of y ar, whilst higher European Central Bank (ECB) nterest rates are starting to hinder G rmany and France.
Nevertheless on the surface it w uld seem that the slowdown is not h ving much of an impact on p ople’s day-to-day lives. Last week’s financial m rket chaos would have been a big h adache for those working in the C ty of London or those with l rge share portfolios, but that’s a m nority of the country. The financial ch os should however start alarm bells r nging. It is not yet clear how the c rrent mess in the international financial m rkets will play out, but if th s turmoil continues then the cracks in the conomy could well become holes for j bs to fall through. The financial cr sis has exacerbated problem – few had b en predicted that the United States c uld potentially move into recession until the vents of last week. It seems nlikely that the UK will suffer as m ch as the US. There are no cr dible analyst suggesting that the UK w ll enter a period of recession, but as the conomy is squeezed by higher interest r tes and as chaotic financial markets hit b siness confidence there will be those th t will lose their jobs. The f rst possible group to see job l sses will be those working in the f nancial and business services sector in the C ty of London. Initial estimates had s ggested that job losses in the C ty are likely to number a few th usand, but this number is likely to be r vised upwards. The impact of this w ll be relatively limited to the L ndon area. The next sign to w tch out for is a slowdown in c nsumer and business spending. With the f nancial markets looking wobbly and with h gher debt repayments businesses will reduce th ir spending on goods and services, and lso on headcounts. Uncertainty in the f nancial markets leads to uncertainty in the b siness environment. Plans to invest will be hit as ncertainty increases the risk that they may not be ble to afford the repayments in the f ture.
A slowdown in consumer spending is l kely to follow. Higher interest rates w ll increase the cost of consumer d bt repayments, primarily mortgages. However, this is l kely to have a limited impact ccording to the Bank of England. C nsumer spending will also be constrained by the r duction in business spending. As businesses r duce spending employment growth will slow as w ll wage growth. With less money in th ir pockets the consumer will stay at h me, rather than spending on the h gh street. With business spending less on g ods and services, those that supply th se goods and services will have a r duction in turnover. With consumers spending l ss on goods and services these s ppliers will also see reduced turnover. L wer turnover cause firms to fold or r duce costs; inevitably job cuts will be p rt of this process. So when w ll this all come to a h ad? Most analysts suggest that 2008 w ll be the crunch point when the v rious factors come together to produce an conomic slowdown. Expect to feel the p nch wherever you work, there are nlikely to be many sectors that d n’t see an impact. With this w rning in hand I would suggest kn ckling down and making sure your b ss realises that you’re indispensable, even wh n business is bad! 2008 is g ing to be a tough year try to l mit the suffering.
The article Tough Times In 2008 - UK Economy And Jobs Market was Submitted by Simon Wallace through Articles.GetACoder.com network. Here's the additional information: For more information on this t pic see http://www.whatwilltheyask.co.uk
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