World Economy

CBI Says UK Showing Signs of Resilience

CBI Says UK Showing Signs of ResilienceCBI Says UK Showing Signs of Resilience

The UK economy remains resilient in the face of wider fears for global growth, the Confederation of British Industry said Monday, as it unveiled its latest quarterly economic forecast on the morning of its annual conference in London.

John Cridland, CBI director-general, said: “The UK economy’s continued strong performance is a clear sign of its resilience in the face of turbulent times overseas,” Works Management reported.

“Manufacturers are enduring tougher conditions, as a persistently strong pound is hamstringing our export competitiveness alongside dampened global growth. But our domestic story is strong and overall we are now in a phase of stable but solid economic growth,” he said.

The CBI’s quarterly forecast revealed solid growth, despite a modest downgrade for 2015, from 2.6% in August to 2.4%. The CBI said this reflected weaker investment growth, driven largely by recent changes to official data. Next year the business group expects the UK economy to grow at 2.6%, down from 2.8%, as a gloomier global outlook means that net trade will drag on growth.

 Interest Rate Rise

Concerns over the global economy have been flagged by the Monetary Policy Committee. Consequently, the CBI said it now believed an interest rate rise was likelier in Q2 next year, rather than Q1 as predicted in the business group’s previous forecast.

The business group also unveiled its first forecast for 2017, predicting solid UK growth at 2.4%, with a gradual rise in inflation easing household spending.

Cridland added: “Overall we must continue to put solid foundations in place to support the economy. That means ploughing ahead with critical infrastructure decisions, such as aviation capacity, maintaining flexibility in our labor market and keeping an open door to businesses and talent from abroad that create jobs and boost our economy.

“Tackling these issues is just as important for businesses as securing reform in the European Union and is crucial for the UK to meet its global ambition in the face of stiff competition.”

 Wage Inflation

The latest Labor Market Outlook from the Chartered Institute of Personnel and Development, the professional body for Human Resources and People Development, suggests that wage inflation is unlikely to take off in the next year due to limited skills shortages and subdued pay settlement forecasts from employers.

The quarterly survey of more than 1,000 employers shows that across all sectors just 15% of current job vacancies are proving difficult to fill. It also reveals that, outside a limited number of industries, UK employers continue to be able to recruit the workers they need without significantly hiking wages and that median basic pay rises of just 2% are predicted by employers in the 12 months to September 2016.

 Supply of Candidates

The Labor Market Outlook finds that the number of applicants per vacancy has remained steady over the past year, with average applications for jobs running at 25 for each low-skilled role, 15 for medium-skilled roles and 8 for highly-skilled roles. This suggests that in general, most businesses are seeing a steady flow of suitable candidates, despite unemployment falling to a seven-year low in October and despite a slight year on year increase (44%-49%) in the number of employers reporting any hard to fill vacancies.

The most common employer response to hard-to-fill vacancies are up-skilling existing staff (48%), followed by hiring more apprentices (27%), recruiting migrant workers (23%) and raising starting salaries for hard to fill positions (22%).