The second half of 2007 has been a rough ride for British consumers. Falling house prices, the rising cost of credit and the threat of a recession has dented consumer confidence significantly. However, recent research has indicated the worst may be over and that we could well be in for a prosperous New Year.
In the past week some of the most positive economic news in months emerged from the United States, the original source of the current global economic uncertainty. Productivity and the number of jobs being created is much higher than expected. Orders at US factories were also up, while an interest rate cut and a proactive approach from the Whitehouse indicates that the economic situation there may not be as bad as previously believed.
And this week even more positive news emerged in Britain and Europe that indicates that the worst may be behind us. The 17th annual UPS Europe Business Monitor Research shows that prospects at UK companies are the highest in 14 years.
Employment is one of the chief indicators of the health of an economy and this latest research indicates that 2008 will be a good year for British employment. Over 38% of business leaders in the UK say they plan to increase their workforce over the next 12 months. That figure is the highest since the UPS survey began in 1993. In all, 84% of senior UK executives predict a stable or growing employment situation in the coming year.
Over half of business leaders questioned said the economic position of their company is better than it was 12 months ago, with only 8% reporting that it is worse. The outlook for 2008 is equally optimistic, as 55% of UK business leaders surveyed predict the economic position of their company will be better one year from now.
The research, which was carried out across Europe, indicates that business confidence is just as high on the continent, strengthening speculation that Europe could be on its way to becoming the new global economic power.
“Following the recent turbulence in the economic climate it is very encouraging to see businesses in the UK and across Europe feeling optimistic, especially in terms of the employment outlook,” says Jim Barber, managing director, UPS UK & Ireland.
This news comes as a further boost for consumers following last week's decision by the Bank of England to cut interest rates by a quarter of a percent. A cut in interest rates is likely to ease pressure on homeowners, provide a boost to the languishing housing market and help build consumer confidence in general.
Now, with this latest indication that employment figures are on the up it would seem that the British economy may have turned the corner. More jobs means more demand for goods and homes, so we could even see a reverse of the current housing market slump.
The fallout from the US sub-prime mortgage crisis may not quite be over and many consumers will be tightening their belts this Christmas as an air of uncertainty continues to hang over the economy. However, business figures emerging on both sides of the Atlantic in the past two weeks have been the most positive in months, so we could be in for a much brighter 2008.