Economic growth: the challenges ahead30 April 2014
The last time I wrote about the economy was back in October 2012, when there were signs of green shoots post the euphoria of the London 2012 Olympics and Paralympic Games. We have come along way in the past 18 months and now those green shoots are in full flower. This week the CBI has increased its forecast for economic growth from 2.7% to 3.0% for 2014 and from 2.5% to 2.7% for 2015.
This in turn has lead to speculation that for the first time in 6 years there is the real prospect of the Bank of England raising interest rates in the first quarter of 2015. In my November blog I spoke about the potential impact of rate rises on home owners with large mortgages, particularly those who are buying in the current market with large loan to value arrangements. It remains to be seen whether a steady increase in interest rates over the next two years will have an impact on the current housing market.
There is no doubt that we are all relieved to see strong sustainable growth in the economy, but this does come at a cost – skills shortages! In a recent survey conducted by Building, 68% of consultancy firms believe that they expect skills shortages over the next 12 months. It also found that 58% predict a growth in headcount and that 45% of employees expect to move company this year, with a further 20% expecting to move within two years. These results reflect both a buoyant market and the fact that employees are prepared to move on if they do not receive promotion and/or compensation for their loyalty during the years of recession.
In a growing market the key driver for a successful company is to attract and retain high calibre people in order to respond to client requirements and deliver an exemplar service. The acid test is whether its people believe the company provides the career opportunities, a competitive package with key benefits, and the cultural fit that aligns with their personal aspirations.