Refocus on Business Finances to Sustain High Employment

15th May 2018.

The slowest economic growth in more than five years has failed to dent Britain’s jobs market, with the latest official figures showing a record employment rate in the first three months of 2018.

The economic picture of the UK is finally improving, with low inflation, low-interest rates, and high employment offsetting any proposed downturns. While the departure of large proportions of Britain’s EU workforce has led to severe skills shortages in certain sectors, employment remains strong for the majority. Large numbers of businesses have even reported high turnover, with employees quickly moving between roles in search of a larger pay packet.

According to new data from the Office for National Statistics, there were 32.34 million people in work in the first quarter of the year, an increase of 197,000 on the previous quarter. As political and economic uncertainty disperse, individuals are able to return their efforts to their work. Productivity saw its strongest levels since 2011, and future prospects have dramatically improved since the government commenced trade talks with Brussels.

Whether the economy is experiencing upturns or downturns, all businesses should prepare for either. At the Credit Protection Association, our debt recovery services are utilised by our members who are suffering from late payers, as well as those who merely wish to sustain good momentum.

Although initial estimates suggest the economy grew by just 0.1% in the first quarter of 2018 – its weakest since 2012 – the UK’s employment rate rose by 0.4 points to 75.6% in the latest quarter, the highest since modern records began in 1971. A majority of jobs created were full-time posts.

Unemployment on the internationally agreed definition fell by 46,000 to 1.42 million between the fourth quarter of 2017 and the first quarter of 2018. The unemployment rate of 4.2% was the joint lowest since 1975.

There was a more mixed picture for wages. Growth in total pay in the first quarter of 2018 was up by 2.6% on a year earlier, slower than the annual rise of 2.8% recorded in the three months to February.

Esther McVey, the secretary of state for work and pensions, said: “Since 2010 we have seen 3.2 million more people move into work right across the UK. Youth unemployment has fallen by more than 40% and the unemployment rate at its joint lowest since 1975.

“With wages growing faster than inflation and increases in the personal tax allowance, not only are more people bringing home a pay packet but they are keeping more of their hard earned money for themselves and their families.”

Ruth Gregory, a UK economist at Capital Economics, warns that the recent good behaviour could influence the Bank of England’s decision to raise borrowing costs.

“March’s labour market figures provide us with optimism that sustained rises in real pay are in prospect and will place more pressure on the MPC to hike interest rates soon,” she said.

The economic load has lightened, and businesses are slowly recuperating. Record-high employment has not been threatened by skills shortages and more people than ever are finding new employment. Business owners need to do their part to sustain this trajectory and keep business finances stronger than before the referendum.

At the Credit Protection Association, our debt recovery services chase down late payers and unpaid invoices, and we provide our members with the financial security to pursue expansion projects and new investments. Some of our members even tuck some cash away in their savings, putting it aside in case of another economic dip, trip, or even if the Bank of England decides to raise interest rates.