There is a plethora of bad economic news in the FT this morning. Start with this:
Manufacturers are scaling back their hiring and investment plans for the first time in almost six years as their confidence buckles in the face of slower global trade.
The latest quarterly survey from the EEF manufacturers' association shows that, for the first time since the start of 2010, more respondents replied “no” than “yes” when asked whether they planned to hire and invest more in the next 12 months.
That scuppers the investment and employment growth plans that underpin George Osborne's forecasts for the next five years. Then add this:
According to a poll of UK contractors by Aecom, an infrastructure and support services group, labour shortages are driving up costs so much that contractors are putting up prices and turning down work from projects and clients they perceive to be high risk.
Aecom [also] said that parts of the industry are already cutting their exposure to the residential market because of fears the capital's house price boom may be starting to falter.
If manufacturing and both residential and commercial building are in trouble that's a triple blow for the UK. Which is compounded by this report:
Sovereign wealth funds in the Gulf have been pulling money out of asset managers at the fastest rate on record as they rush to boost their economies following the collapse in the oil price.
At least $19bn was withdrawn by state institutions during the third quarter, according to data provider eVestment, denting investment managers' profits and raising concerns about the prospect of further outflows.
So, the emerging markets are in trouble, and could be exporting recession to us.
And the FT also carries commentary on why the EU QE programme cannot work now, which I think to be true whilst noting, to add to the woes, that in the US interest rates are likely and that the Bank of International Settlements is telling other central bankers to follow suit, come what may. To put it another way, now the bankers have run out of ideas they are promoting recession as a policy.
In the light of all this if we survive 2016 without a significant downturn I will be surprised. We might, but I cannot see how right now. And that is worrying for us all, most especially when we have no plan for how to deal with it.
And we'll only have that when People's Quantitative Easing is accepted as a necessary step to manage such a situation.
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“labour shortages are driving up costs”. I’m in a project with a UK mfu. Was talking on the phone this morning to them: their biggest complaint: a total lack of even average engineers – & some of their engineering teams have zero British engineers. My remark was: go to the city of London – they are all there – working for banks. There is a severe structural problem in the UK in this area & the current gov’ lacks the brains to recognise it and the will to do anything (you train as an engineer @ uni’ get debts of …. £60k? & when you qualify – well what job is going to help you pay off that debt? the banking sector. Well done the lying dems and Tories for heaping onto our futures (which is what the young are) huge amounts of debt. One wonders if, each morning, Uk politicos spend 20 minutes practising being stupid by running into a brick wall, head down, at full speed.
They do
Only on a Sunday, ‘cos that’s their day of rest. As for the remainder of the week, it’s the full half-hour, minimum.
Don’t be absurd. This lot have no need to practice 🙂
Absolutely true. The financial institutions harvest them directly from the universities with the promise of lots of money. Barely a day goes by without a PWC, Barclays, or some other company setting up a gazebo in the square at Imperial and giving out free food and the promise of a 6 figure starting salary to the undergrads there. I don’t blame the students, they are young and the promises that are made are very appealing, by the time they realise they’ve been conned into selling their souls, they are trapped.
I think in America, something like 45% of ivy league graduates go into/or seek work in the financial sector.
http://www.forbes.com/sites/michaelgibson/2014/02/07/the-ivy-league-has-perfected-the-investment-banker-and-management-consultant-replicator/
Sad
No, they want the rest of us to bang our heads against the wall. What frightens them is people who use their heads to think and ask searching questions and find answers. This is why this blog is so useful and why it attracts those who just want to rubbish what Richard says.
Won’t the skill shortage be a problem for PQE
From the same article – http://www.ft.com/cms/s/0/fbf58576-9a9a-11e5-be4f-0abd1978acaa.html#ixzz3tdSjWVbp
“An estimated 300,000 left the building trade in the 2008-10 downturn. The number of construction qualifications awarded through apprenticeships, colleges and universities has also fallen by 10,000 in the past two years, according to research by the Local Government Association.”
Maybe we need to do some Pre-PQE training, although no doubt a downturn will “free up” some of the existing utilised labour.
It will be – except that PQE would provide work in places where people want to work – not the City of London where the shortage is
I doubt there is anything likle the skills shoprtage talked about across the country as a whole
I wonder how much of the Gulf Sovereign wealth funds that are being pulled out are going into direct, indirect, overt or covert funding of jihadi groups fighting across the Middle East and North Africa in places like Syria, Iraq, Lebanon, Libya, Niger, Mali etc.
Its not Tornadoes we need its accountants, policemen and fast track courts. No matter how fanatical you are you can’t do bugger all without resources like rations, equipment and arms.
All paid via tax havens, I suspect
Richard “I doubt there is anything like the skills shortage talked about across the country as a whole”
My – admittedly anecdotal- evidence would suggest the shortages are widespread in the UK. But surely PQE could ‘capitalise’ engineers by the expedient of including labour in the cost of infrastructure projects? Much as PFI does now?
The shortage [of engineers] has been widely recognised, by many people, for a decade or more.
A lot of time, and money, is being invested to correct the deficit (one that needs to be corrected, so we’ll leave Gideon out of it).
It takes a large amount of time to correct what went wrong over 20 years ago, and it all starts at school. Leave it too late in life, and it is an uphill job for the individual.
“Engineering employers have the potential to generate an additional
£27 billion per year from 2022 which is equivalent to the cost of
building 1,800 secondary schools or 110 new hospitals. If the UK
is to benefit economically from this, we will need to meet the
forecasted demand for 257,000 new vacancies in engineering
enterprises in the same timescale. Achieving this will take
persistent and collaborative delivery.
Failing to meet our engineering workforce requirements will
not only damage the UK economically, but it will also have a
detrimental effect on individual employees’ prosperity and the
economic sustainability of engineering employers. What’s more,
failure will impact on engineering’s role in providing a lasting legacy
for future generations through ensuring the supply of food, clean
water and energy — a tough challenge against a backdrop of climate
change and ageing populations. The single biggest threat to
success lies with education: to meet demand, we need enough
young people to study STEM subjects at schools and colleges.
Currently, there are not enough specialist STEM teachers trained
to a sufficient level to support this aim”
http://www.engineeringuk.com/EngineeringUK2015/EngUK_Report_2015_Interactive.pdf
Short-signtedness in the past has led to the present problem.
I’m a chartered accountant but my degree was electrical engineering and maths, from one of the Russell group universities.
In my class of 20, 3 as far as I’m aware are still in engineering. The majority of the others in some form of finance, banking or consulting career.
I would have loved to have gone in to product design engineering. Except that in the south-east, I would have struggled financially for the rest of my life.
If you fix the cost of living crisis, you’d fix the shortage of engineers.