With BT Job Cuts and Retail Crashing Will the UK Economy Sink or Swim?

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With BT Job Cuts and Retail Crashing Will the UK Economy Sink or Swim?

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Good News or Bad News? It’s been a confusing week…

It is Friday morning – and you could be forgiven for being confused by the week’s conflicting news stories. Has it been a good or bad week for the UK economy? And more importantly for your long-term job prospects?

By Mark Richards

By any standards, this has been a puzzling week. I turned on the news one day to see that the retail sector had suffered its worst month for 10 years – and then I read upbeat trading statements from both Morrisons and Next. I checked online and saw that BT was planning to ‘slash’ 13,000 jobs – but the next story reported that UK corporate profits were at record levels.

So what is really going on in the UK economy? And what does it mean for our jobs in the years ahead?

Let us take a look at the three main stories in more detail – and see if we can make some sense of them.

BT slashes 13,000 jobs

We have written previously about the swathe that AI and robotics could cut through jobs in the UK – was this news from BT the start of it?

BT will cut 13,000 jobs over the next 3 years – that is around one in every eight people it employs – as it looks to slim-down management and back office roles. It will, however, employ 6,000 more people “to support network deployment and customer service.” To the cynic, that might sound like cutting management and employing more people in call centres, with BT claiming that the move will save £1.5bn and make the company “lean and agile.”

BT was reportedly badly hit by an Italian accounting scandal last year which apparently cost it £500m and in a further cost-cutting measure announced that it would be moving out of its central London HQ.

Philippa Childs of the trade union Prospect said that the job losses were “a devastating blow to [the company’s] managers and professionals.” And anecdotally there were plenty of dark mutterings about BT staff paying the price for the “vanity project” of screening Premier League football.

The worst retail month for nearly 10 years

March has been described as a “brutal month” for UK retail. Like-for-like sales fell by 10.1% in the month, making it officially the second worst month on record, second only to November 2008 when we were in the grip of the financial crisis, and the country was hit by heavy snowfalls.

The beginning of March was blighted by the Beast from the East lashing the UK, but by the end of the month it was the Easter holidays – and March also brought us Mother’s Day. But it appeared that everyone was shopping for Mum online – as I have written previously, I have noticed myself buying far more things online this year that I would normally have bought on the high street.

The two worst performing sectors were fashion and homewares, with sales respectively down 12.7% and 13.2% on the previous year, as Sophie Michael, a retail analyst, said the results “Showed how paper-thin consumer confidence really is currently.”

With BT Job Cuts and Retail Crashing Will the UK Economy Sink or Swim?

On the other hand…

It was not all doom and gloom in the UK economy. Both Next and Morrisons have recently put out positive trading statements and last year saw UK companies have a record year for profits.

The UK’s top 350 companies posted profits of £153.8bn according to analysis from the Share Centre, beating the previous record set in 2011 by 0.2%.

Total revenues for the country also rose significantly last year, climbing over 20% to £1.33tn – which is just below the peak of 2012.

So there is plenty of good news out there and – despite the comments of Ms Michael – it appears to be reflected in consumer confidence, which is now at a 14-month high.

The headline ‘confidence index,’ published by YouGov and the Centre for Economics and Business Research increased by 2.2 points to 109.8 – with any figure over 100 meaning that consumers are feeling optimistic. According to the survey, the improvement in confidence was “driven by better perceptions on household finances, job security and broader business activity.”

The Bank of England responded to all these mixed measures at its last monthly meeting by deciding to leave base rates on hold at 0.5% – although increases are still expected later in the year.

So what should we do?

Throw in a few other contradictory news stories – April saw the biggest monthly fall in house prices since 2010 but new car sales were up by 10% – and the waters become even muddier. So where does that leave you and me as we look forward to the weekend and wonder what next week will bring?

The good news: it now looks as though wages are set to rise at a faster rate than inflation, so most of us should start to feel better off. Businesses are generally optimistic about the future, and skilled, talented staff are in short supply.

The bad news? The world remains a fragile place and any recovery in the UK economy could be blown off course if the China/USA trade war develops. And there is still no agreement over the shape of Brexit: more than 600 days after the Referendum we still do not know if we will be leaving the customs union or not.

And then – as I have suggested above – there is artificial intelligence and robotics. On Monday I will be taking a more detailed look at the impact they will have. The world of work is going to change, but that does not necessarily mean there will be fewer people employed. By 2030, for example, there are expected to be 100,000 people employed in the fast-growing financial technology sector.

So, to answer the question at the top of the paragraph what should we do? First and foremost, keep learning. As the world of work changes at an ever-faster pace, the key skill employers will look for is the ability to learn. Ten years from now a large number of us are going to be doing jobs that have not been invented yet. And on a more mundane level, do not spend more than you earn.

It is nearly 170 year since Charles Dickens wrote David Copperfield, and the numbers have changed dramatically – but what Mr Micawber said then remains true today:

“Annual income twenty pounds, annual expenditure nineteen pounds, nineteen shillings and sixpence, result – happiness. Annual expenditure twenty pounds and sixpence, result – misery.”

By | 2018-12-14T09:31:36+00:00 May 11th, 2018|Business, Economy, Personal Finance|0 Comments

About the Author:

A previous financial services business owner, Mark is an experienced Journalist Speaker, Speechwriter and Coach. He has written for a number of websites related to the financial sector and won numerous awards. Mark has also published a number of books.