1. Active PrActice UPDATEs FeBrUArY 2012
plummerparsons
apfeb2012-eu
Economic update
If there is one topic that continues to dominate the airwaves and the
thoughts of many it is the economy – what will happen this year?
What impact will result from the woes of other countries? Here
we take a look at some of the factors that continue to impact our
marketplace. Economic UPDATE
Looking back 2011 was also the year of the Eurozone
sovereign debt crisis, and as we step into
Key metrics
2011 was the year the UK economic 2012 policy makers continue to grapple with Jobs and unemployment
recovery ground to a halt. Economists the consequences and solutions, as credit
rating downgrades increase the interest paid The most recent Office for National
forecasting for the year had underestimated
on sovereign debt. Statistics (ONS) unemployment figures
the damage suffered by the credit crunch,
showed that UK unemployment increased
and troubles mounted in the Eurozone, which
meant a series of continuously downgraded Looking forward to 2.68 million in the three months to
November 2011, the highest level since
or reconfigured forecasts.
Unfortunately we can’t wave goodbye to 1994, and a total of 8.4 per cent of the
Inflation crept up throughout the first three the conditions we face in 2012, and the population.
quarters of the year, constricting household’s likelihood is that the situation is going to get
Youth unemployment has been the most
already squeezed budgets, their spending, worse before it gets better. The next twelve
worrying statistic though, as it hit 1.04
and their ability to pay down debts. months will be important for everyone, and
million, and the highest since records
while we can’t predict what will happen
Meanwhile, businesses struggled to survive, began in 1992.
in the Eurozone, we can at least put some
as cashflow continued to cause problems, damage limitation measures in place. Common predictions are that the number
and banks restricted their lending to
of unemployed people will continue to
businesses further. Those that have survived Forecasts for the following metrics will
rise throughout 2012, particularly as
displayed a level of ingenuity, flexibility and undoubtedly change as 2012 progresses,
private sector job cuts kick in. In fact,
grit that will stand them in good stead for the but here are some key economic indicators,
the Chartered Institute of Personnel
year to come. how they are faring now, and common
Development (CIPD) predicts that
predictions over the next few months.
November saw the Chancellor’s Autumn unemployment will peak at 2.85 million in
Statement measures announced, and while it Read on to find out how we can help you to 2013, before falling back again.
was the draft clauses of the Finance Bill that prepare for the coming months.
revealed tax changes, the Chancellor did
reveal a series of initiatives, predominantly
designed to ease the pressure on businesses.
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Eastbourne BN21 4PT
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2. Economic update
Gross Domestic Product (GDP) Meanwhile, the Bank’s quantitative easing Keeping plans up to date
(QE) scheme, first introduced in March
Forecasts for UK GDP, which refers to the You should review and revisit your business
2009, has since increased to £275 billion,
market value of all final goods and service plans frequently at times like these.
the last instalment of which was introduced
produced within a country in a given Circumstances can change suddenly, and
in October 2011. Some economists are
period, were continuously downgraded you may find that what was appropriate at
expecting to see a further boost as early as
throughout 2011. And while forecasters the start of the year is no longer relevant six
February, a move that has been favoured by
seem to have recognised that they were months later.
business groups.
over-ambitious with their predictions, those
for 2012 are still being accused of being Flexibility
Exports
over-generous. It is also important to remain as flexible as
Exports are expected to play an important
In November the Office for Budget possible; you never know when you may
role in our economic recovery. Recent statistics
Responsibility (OBR) forecast 0.7 per have to suddenly change tack and being
from the Office for National Statistics (ONS)
cent growth in GDP in 2012, which agile means that you may be able to take
show that the UK’s trade deficit fell between
was viewed as low compared to outside advantage of any sudden opportunities that
October and November, meaning exports to
forecasts of 1.2 per cent. But more recent arise.
non-EU countries fell and imports from non-EU
forecasts claim that any growth at all countries rose. Contact us to find out how we can help you
over the next 12 months would be an to mitigate damage done to you and your
achievement. But on a positive note the Government is
business.
recognising this, with new initiatives to help
Inflation medium-sized businesses to export into new
markets. Business groups are calling for a Business opportunities
Inflation began to fall back in October
national export drive this year, and economists
2011, and has been falling ever since. Marketing exposure
claim that exporters must look to new markets
The Consumer Price Index (CPI) now stands
in order to give the UK economy the export Opportunities could be as simple as
at 4.2 per cent, and this falling streak is
boost that it needs. making the most of the fact that your
expected to continue, and act as a platform
business has survived your competitors by
for consumer confidence and recovery.
Protecting your business shouting about it through your marketing
January saw the UK’s leading energy channels. In particular, making the most of
While the overall outlook for the next 12 the cost effective, and successful marketing
providers reduce their gas and electricity
months is, for most, subdued, there are approaches that the internet offers, including
prices, which will also contribute to this.
always ways that you can mitigate any social media and blogs.
This is promising, and the Bank of England
potential negative impact or even turn the
expects a sharp fall in inflation during
situation into a positive one. The likelihood Learn lessons
2012, particularly after factory gate
is that if your business survived the last few
prices dropped by 0.2 per cent between You can learn lessons from those that have
years, you are in a good position to take
November and December in 2011. been less successful during the current
advantage of the opportunities that arise at
economic climate. Observe what went
Interest rates and Quantitative Easing times like these.
wrong for them and ensure that you do not
The Bank of England’s Monetary Policy Damage limitation make the same mistakes.
Committee (MPC) reduced the base interest
As the economy remains at a standstill, there Buying new businesses
rate to a record low of 0.5 per cent back
are measures that you can take to limit any
in March 2009. It has stayed there ever The downturn could provide you with the
damage caused to you and your business.
since, despite various speculation, and perfect opportunity to expand through the
Suggestions include:
some forecasters claim the rate will remain acquisition of a business. You have obviously
that low until 2016. Cashflow led a successful business through hard times,
and there is no reason why you could not do
The fact that inflation is falling back means Keeping on top of your debtors is vital, the same for a new business.
that the MPC is under less pressure to push particularly as many businesses are struggling
rates up, and while savers are losing out, to keep afloat. But it is also important to
the threat is that pushing the rate up could remember that this works both ways, and that We can help you to identify and grasp
push home owners into trouble and result in your creditors will need to be paid on time any opportunities that could help you to
more repossessions. too. prosper over the coming months. Please
contact us to find out how.