Economic statistics have recently been released by Hays Recruitment and, unfortunately, the worst fears have been realised. The economic recovery of the private sector is simply not enough to balance the continued fall of the public sector as a result of government policy aimed at reducing public debt.
The statistics are quite positive for the private sector with net fees growing by approximately a quarter in the period July to December, 2010. However, the fees for public sector jobs are 36% down for the same period. This means that this category is not 45% down from its last market high.
Alistair Cos, Hays CEO says that the government needs to engender confidence in SME businesses and the looming threat of increasing unemployment will take care of itself.
Chancellor George Osborne has stated that the next budget speech will outline the government’s plans for growth not that the focus may be allowed to move from decreasing the budget deficit. However, Osborne is faced with a daunting task ahead, especially due to the fact that food producers expect large increases in food prices as a result of rising commodity costs.
There have been some positive signs from the government. These include getting banks to lend more to business, plans to regenerate regions under pressure and driving the creation of new technical businesses in the country.
However, many feel that this is just not enough and more must be done to increase employment in the SME market. Government incentives are imperative to start a much needed recovery. Additionally bureaucracy and regulation needs to be minimised to promote growth and inspire confidence in the small and medium businesses in the country.
The Bank of England also needs to sit up and take note of the fragility of the economic recovery. Rushing the increase of interest rates may crush gains already made and send the economy back to a downward spiral.