Kevin J Ball, Mervyn Dinnen, Neil Morrison and Steven Toft have their say.
As a companion piece to XpertHR’s January 2012 economic commentary article, I’m delighted to be able to present a round-up of economic predictions for the coming year from four leading UK HR bloggers:
- Kevin J Ball
- Mervyn Dinnen
- Neil Morrison
- Steven Toft
I am extremely grateful to each of these gentlemen for taking the time to contribute their personal expectations for the UK economy in 2012 and beyond. You can find out more about each contributor from the short introductory paragraph preceding their own words.
HR Director Kevin J Ball is the author of the People Matters blog. Kevin wrote the classic first post in XpertHR’s If I could change one thing about HR… series and also contributed his views on economic prospects for 2011 to last year’s round-up, which he revisits here. You can follow Kevin on Twitter and connect with him via LinkedIn.
Last year I predicted a range of numbers for the economy. All were drawn from decent sources and all of them proved to be wrong. GDP (worse than predicted), Inflation (worse), pay settlements (slightly better) and unemployment (slightly better again).
This year I’m probably better sticking to something broad – things aren’t going to get substantially better in 2012: we are probably back in recession right now, inflation may well tail off, unemployment will get worse and pay isn’t going up anytime soon.
The saddest thing that George Osborne and I both learned last year is that all of this is largely out of the hands of UK Government anyhow. Look East for growth and investment and expect to pay an awful lot for it.
I also wrote about political risk. I characterised our politicians as tiptoeing between the stalling US recovery and the eurozone debt crisis and wondered if the coalition could hold.
Now it’s 2012, and the US is showing only the faint signs of life you’d associate with a dead cat bounce and it looks like the markets may push the EU off a cliff before the end of the year.
Whether Cameron and Clegg have just rewound the UK and Europe to 1970 or are skilfully dancing the funky Gibbon with their own backbenchers is a matter of guess work. My money would be on Thatcher’s children finally getting their way and severing our ties (the good faith ones if not the political ones, just yet) with our biggest market. Once more the coalition looks precarious on paper but they’ve been surprisingly steady so far. A little side note to come out of the recent EU summit was on employment law harmonisation. Nice work to get to after we’ve untied the Gordian Knot.
For HR, I’m afraid it’s more of the same for 2012. Siege budgets and the Board stockpiling cash will make it really tough to do the development work most of us love.
No business is going to take a bet on anything other than the surest of sure things and we will all struggle with the depressing reality of redundancy programmes and other, even less savoury, regressive work.
The predicted erosion of employment rights in the UK is materialising but opportunity continues to exist for business to do good for themselves, the economy and society through work placements, apprenticeship schemes and other initiatives for tackling long-term unemployment (such as this). With a little imagination, this is one opportunity for innovation in HR that may take us past hand-wringing and into doing something useful.
It’s a pleasure to welcome Mervyn Dinnen for his debut piece for XpertHR. Mervyn is the Content and Community Manager at Jobsite, and writes the T Recs blog. You can follow Mervyn on Twitter and connect with him via LinkedIn.
We are currently experiencing a post-traumatic flat-lining economy suffering regular aftershocks. Indeed, if a recession was defined as six months of negative growth rather than two successive quarters then we would have already had our double dip (in Q4 2010/Q1 2011), and would almost certainly be looking towards our next one at some stage in the next nine months. Any further deterioration in the EU economies will only push us further backwards.
Whatever the rights or wrongs of the economic re-engineering that we’ve seen over the last 30 years or so, we’re now stuck with a consumption-based economy in which there is little appetite or available funds to consume.
Without increased consumption there will be little growth, and without growth there will be few new jobs. Anecdotally there are already signs of the feared job-loss recovery taking shape…although we are currently seeing the numbers of advertised positions holding up.
So for 2012 I can see only more of the same. No doubt there will be some positive quarters for economic growth (almost certainly around the time of the London Olympics).
But they will be followed by some negative quarters, with GDP remaining fairly flat and unemployment rising as a stalling economy eats into the confidence needed to create new jobs and businesses.
There are skill shortages in some industries and I can only hope companies that can hire do so, and take a chance on up-skilling those looking for work.
On a positive note, I do think there will be a growing creative spirit amongst the younger unemployed as they look for new ways to make money and begin to embrace a form of flexible self-employment.
Neil Morrison is the Group HR Director at Random House, and the author of the Change-Effect blog. Last year, Neil contributed a superb series of guest blog posts to XpertHR, entitled What is commercial HR? You can follow Neil on Twitter and connect with him via LinkedIn.
I’m notoriously bad at predicting anything.
As I suggested on Twitter last month, if you want to know when to buy euros, the answer is the day after me. But I’m game for anything and you never know, if I keep things broad enough I might just get something right and not embarrass myself in front of the other more worthy commentators.
I guess the euro is as good a place as any to start. Clearly, we’re yet to understand the full fallout of David Cameron’s decision to veto the modification of the Lisbon Treaty. The story of the euro is a long way from over, this is just Act 1. I have to admit, whilst I don’t agree with Cameron’s reasons for not signing the modification, I believe in the longer term this may be a decision that looks wiser than was initially assumed. The eurozone is going dominate the news for the first half of the year. Watch out for more bad news – particularly from France.
Back in the UK we have to expect more carnage in the retail sector in the first quarter. I’m amazed that Comet and Blacks are still trading, but I think the malaise goes much further. I’m expecting a profits warning at my old employer Home Retail Group, much as I hope that it doesn’t occur, and it wouldn’t surprise me to see other big high street names seriously struggling. The fear is, of course, that these will lead to store closures and resultant job losses in an already difficult labour market.
And the labour market is an area that really worries me for 2012. The unemployment figures are nothing new, we know that they are looking grim – particularly when it comes to youth unemployment – and I don’t expect to see any significant improvement. What worries me more, however, is that at the same time that we have high unemployment, we are also seeing report of recruiters being unable to fill the vacancies that they have. This “skills gap” or “attitude gap” is going to be the subject of much more attention next year.
But don’t expect any quick fixes. We have serious structural labour market issues and they won’t be sorted out in months or perhaps even years.
On the upside? Well there isn’t a huge amount I’m afraid. The Olympics SHOULD bring some comfort, but I fear this will be predominantly centred on London and the South East.
The Euro championships MIGHT see a slight upturn in consumer spending (and confidence if Rooney manages to stay on his feet) and a mild winter and a warm spring and summer COULD just see us through the worst of what I believe will be an economic flat-line at best or a slight worsening at… well, worst.
Not much to be cheerful about, not much to look forward to. But I’d like to leave you with this. There are a lot of people and a lot of countries that are worse off than us. I know that won’t seemingly make the next year any easier, but remember that we have a lot of things going for us, as a country, as a society and as an economy. Things will pick up, we all know they will, it is just a question of when.
It is my privilege to welcome another HR blogger/writer making their XpertHR debut here, in the form of Steven Toft. Steven is a Director at Crucible Consulting, and is a contributor to the Guardian and the Evening Standard. You can connect with Steven via LinkedIn.
For western economies the financial crisis could not have come at a worse time.
On its own it would have been bad enough but high debts, both public and private, aging populations and a shift in the balance of economic power to emerging economies have compounded the problem. Public debt goes up in all recessions but, in the past, high economic growth has enabled us to outrun it. Post-recession growth years of 3% and 4% increased tax revenues and enabled Britain to reduce its debt-to-GDP ratio.
The longer-term forecasts don’t look good either. The OBR’s fiscal sustainability report doesn’t envisage growth reaching 3% for any year between now and 2030. Some time towards the end of this decade, the effects of an aging population will start to put severe strain on the public finances, adding an additional 2% to 5% of GDP onto public spending.
Just to get the UK’s debt down to pre-recession levels by 2050 will, say accountants PwC, require a further £20bn in spending cuts, or equivalent tax increases, by the end of this decade.
The outlook, then, is for an aging, low growth economy, carrying levels of debt which would have been unthinkable only three years ago. Martin Sorrell’s quip about a ‘bath shaped recession’ was prescient. A sharp fall, followed by a long period of stagnation, the bath’s corrugated bottom representing a series of small peaks and troughs, before the gradual recovery kicks in.
The Long Depression of the 1870s and 1880s is perhaps a better historical parallel for the next decade than the Great Depression of the 1930s. Austerity will be the new normal for some time to come.