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After months of large pay packets and high employment, the economy has illustrated its unpredictable nature and wages have taken a nosedive. According to new data from the Office for National Statistics (ONS), wages suffered its first decline in over a year as figures fell to 2.8 percent.
Employment remains at a record high, with over 146,000 jobs added to the economy in first few months of the year. The resulting combination of low wages and low unemployment could leave many consumers stuck in low-paid jobs but with limited opportunity to pursue alternative employment. On account of the high employment, the amount of open vacancies has diminished. This could further dampen consumer confidence and increase pressure on ever-suffering retailers.
At the Credit Protection Association, many of our Members have been hit hard by economic dips, and have struggled to recoup the loss to their cash flow. We urge all our Members to prepare for all eventuality, saving enough cash to recover from economic slowdowns as well as having enough to take advantage of the good.
Economists said the latest figures reduce the chances of a near-term increase in interest rates.
HSBC’s UK economist, Elizabeth Martins, said: “The market is pricing in just a 4% chance of a rate rise at the Bank of England’s 21 June meeting, so any change to policy would be a big surprise… at this point, the market sees around a 50% chance of an August hike.”
Since the financial crisis, lack of investment in new machinery and technology to help firms perform better punched a hole in economic performance.
The public sector pay freeze followed by the 1% pay cap has also weighed on the overall numbers.
Some economists also argue that a lack of bargaining power – union membership has been in long term decline – is leading to fewer widespread agreements on earnings increases.
The TUC's General Secretary, Frances O'Grady, said: "Wage growth is stuck in the slow lane. At this rate pay packets won't recover to their pre-recession levels for years.
Any shifts in the economic trajectory are rarely expected, but always effective. As a result, business owners should ensure their finances are prepared for both upturns and downturns, with enough savings to prosper from either. Smaller wages will quickly result in a tighter squeeze on household budgets, but business owners can take steps to ensure their business finances aren’t as badly affected.
While wage growth has stalled slightly, the overall economy is improving, with faded inflation and high employment still boosting the country’s positive image. When running a business all owners must be aware of the economic shifts that can occur, and how to prepare. Whether interest rates rise or don’t or whether inflation stays low or rises, businesses should be prepared for either direction.
At the Credit Protection Association, our debt recovery services chase down unpaid invoices and late payers and restore some financial power to our Members. Many have gone on to explore new investments and opportunities and attracted even the most penny-pinching consumer. Furthermore, CPA also boasts highly competent credit management products, such as credit checks and status reports, to identify and eradicate residual debt or late payment. The collaboration between the two services has proved successful for a lot of our Members, providing the extra cash as well as the safeguards to protect it.
Here at CPA, we fight to the tooth for our members, particularly those who have suffered through late payment and bad payment practices. Furthermore, we recently created a new department within our company dedicated to getting our members rightly compensated in accordance with the Late Payment of Commerical Debts (Interest) Act 1998. This has unlocked hidden cash and potential for our members and brightened their prospects and longevity on the high street.
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