Economic Stabilisation
Against the backdrop of the (albeit) small reduction in inflation, the momentum around "economic stabilisation" feels like it will gather pace again.
CEO of specialist recruitment firm, RMG, has shared his predictions for what could happen over the next few weeks as we approach the end of 2023…..
Rishi Sunak’s achievement in reaching his target to halve inflation by year-end has already led to discussions about the possibility of interest rates decreasing in the summer of 2024. This development has cast a positive light on the economic landscape, and of course the potential impact on the hiring market.
Inflation, which has been a persistent concern in recent times, has had significant impact on various sectors of the economy. It influences consumer spending, investment , and crucially, the job market.
Here’s my twopence on how the anticipated decrease in interest rates might influence the market (combined with what I've been hearing from CEO's and Company leaders I've been speaking with in recent months):
· Boost in Business Confidence: A reduction in interest rates by definition makes borrowing cheaper. Companies may find it more feasible to expand, invest in new projects, and in a broader sense just "get on the front foot"!
· Encouragement for Investment: A steady reduction in interest rates may also start to stem the tide of investors who are presently dawdling on equity investments into IP rich but profit poor Biotechs. The effect may be to encourage more investment into these "riskier" opportunities rather than camp in the debt investment space if the rates aren't as high.
· Consumer Spending: Reduced interest rates often lead to lower borrowing costs for consumers. This frees up disposable income, leading to increased spending on goods and services. As demand rises, businesses could respond by expanding their operations, necessitating more talent.
The potential rebound effect is a subject that will no doubt be heavily debated over the new few days with the Autumn Budget statement now less than one week away. Of course, none of us truly can predict the future, but news like this is certainly a welcome announcement.
For anyone considering launching recruitment projects in the new year, one thing is for certain, competition for talent will remain strong; assessing the market feels like a good move and we would be delighted to invite anyone considering their recruitment plans to connect for a free, confidential insight into their respective market.
