Parasol Group Managing Director, Derek Kelly, on his predictions for 2012
There is no denying it’s tough out there from an economic point of view and you don’t have to look too far into the national media for predictions of doom and gloom. The old adage that ‘no news is good news’ never held sway in the markets of Europe and quiet periods would see financial indices around the world falling. It seems that nowadays the opposite is true and no news means no more bad news so investor confidence spikes a bit.
This has certainly been the case in recent weeks although the International Monetary Fund (IMF) predictions for global economic growth last week will no doubt see stock markets falling back somewhat. According to the IMF, the UK’s economy will grow 0.6% in 2012, a sharp fall from their early estimate of 1.6%. However the news is worse for the Eurozone as the IMF predicts a fall of 0.5% for the same period. There is no doubt that the troubles over on the continent are having a negative impact on the economy.
Incidentally, the prediction for the global economy is growth of 3.3%.
Back to the UK and, however small, growth is growth, so talk of a recession is premature. Short-term stagnation during the 1st quarter of 2012 will be tough but does not indicate a recession and the numbers are better than those during the last downturn. Confidence is low though as lot of our recovery depends on the Eurozone. The members of the manufacturing organisation EEF are split almost fifty-fifty on how the economy will go in 2012. 51% think things will improve, 49% think things will worsen. However, four fifths expect sales to maintain 2011 levels or go up.
Many, including Centre for Economic & Business Research, predict low interest rates in the UK until 2016. A lot of economists don’t expect rates to go lower though and believe the Bank of England will announce a new round of quantitative easing in February 2012.
Inflation fell recently from 4.8% to 4.2% which is good news, but pay freezes and wage stagnation mean real household income is falling. The Government inflation target is 2% and we are a long way off achieving that yet.
Looking on the bright side
Right, that’s all the negative stuff out of the way. Let’s focus on the positive, and believe it or not, there is a lot to be positive about for the UK contractor and freelancer community.
Self-employment is on the up at the moment, by 8.4% in fact, which brings the total of UK self-employed workers to 4.2 million. Many of you are turning the tough economic times into opportunity, and there are opportunities out there for contractors and freelancers.
A Freelancer.com survey recently highlighted that some sectors look extremely bright, one example being IT. In particular, demand for those with skills in mobile technology and digital skills, such as app development are on the rise. Android development roles are up 33% with iPhone and iPad development roles up 18% and 22% accordingly.
Demand for programming skills is also still high and climbing, e.g. Java roles are up 36% and HTML 5 up 46%. Engineering also remains strong, online demand for engineers according to the Monster Employment Index is up 28% year on year with construction and extraction roles up 24%.
Oil and gas sectors, bolstered by the high price of crude, are still seeing lots of investment as well.
The marketing sector is also recovering well. According to an IPA Bellwether Report, marketing budgets were up for second consecutive quarter at the end of 2011. This is always a good sign for the economy as marketing budgets are amongst the first to be cut when times are hard. Increasing marketing spend is a good indicator that confidence is returning to the UK.
Innovation, innovation, innovation
The biggest reason I feel positive about 2012 for contractors, temps and freelancers is that you lot tend to be an innovative bunch by nature, and innovation is key to the economic recovery in 2012.
When in a recession, there are generally three options to take to get out of it. Firstly, a government can borrow its way out and get people spending by creating jobs, but with the enormity of the UK’s structural deficit this is not an option the current UK Government will take. Secondly, governments can build their way out, and George Osborne did announce some significant public infrastructure projects in his autumn statement which should provide opportunities for contractors, freelancers and temps.
However it is the third option that is key here: innovation. At a time when the Government is attempting to manage the UK’s structural deficit and consumer spending is at an extreme low due to families tightening the purse strings, innovation could be our best tool for creating growth and innovation is something that contractors and freelancers have consistently demonstrated. Hewlett-Packard recognises this and has already pledged to use more SMEs, contractors and freelancers in 2012 on government and private sector projects.
So yes it is tough out there, but stay positive, be innovative and 2012 doesn’t have to be the doom and gloom year a lot of the media will have you believe.