Could political uncertainty upend the jobs market in 2015?
The General Election has put political risk back on the worry list for 2015. What could the outcome mean for the recruitment market and especially 3Search’s specialist area, the digital and marketing sector?
Once upon a time elections in the UK were pretty straightforward. The vast majority of the votes would go to one of the two big parties – the Conservatives and Labour – and it was a near certainty that one of them would win enough MPs to form the next Government. It isn’t straightforward anymore.
CityAM reported last month that, according to the latest polls, ‘only one thing is certain… a coalition is much more likely than a one-party rule, with the chance of a Labour majority at 2.2 per cent and a Conservative majority at just 1.3 per cent’. A range of unstable looking coalitions, potentially including the SNP, UKIP or the Lib Dems are the most probable outcomes. So, chaos in Westminster is likely after May, but will it be felt in the jobs market?
It could be. A recent survey of economists for the Financial Times found that 60 per cent were worried that political uncertainty could affect business and consumer confidence in 2015. EY’s forecasting group, the Item Club, have gone further and warned that the economy could suffer a ‘huge uncertainty shock’ if the election results in a hung parliament.
Some experts think that will mean businesses delaying new projects, stalling investment, and cutting costs. The Item Club’s chief economic adviser warns that ‘looming political uncertainty risks denting corporate confidence – the question now is how will these risks play out? I expect caution to become the order of the day’.
Worried? Don’t be.
There are actually a number of reasons to be confident about the economy, and in particular the marketing sector, in 2015:
Coalition government is now accepted as workable and the civil service is ready – we’ve been here before in 2010 and, despite predictions that the sky would fall in, things carried on. Civil servants are much more experienced in running coalitions now and will have been prepping for various scenarios for months. In any case, the main guardian of the economy – the Bank of England – is independent from Government and so isolated from any possible chaos in Westminster.
The underlying economic data is really strong – The Confederation of British Industry (CBI) expects the economy to expand by 2.7 per cent in 2015, inflation is at its lowest levels for many years, and unemployment is plummeting. Crucially for the marketing sector, household spending is bouncing back and consumer confidence is high. Under these conditions, it would be a foolish company that cut marketing spend.
The UK’s creative industries are global players – The UK really excels at the creative industries, especially marketing and advertising. Government figures from early this year show that the sector is worth a staggering £8.8 million an hour to the UK economy and will grow 10 per cent in 2015 – much faster than the economy as a whole. Importantly, the sector exports more than £17 billion of services every year, ensuring that it stays strong even if growth at home is dampened.
Business is much better now at managing uncertainty – companies have been managing turbulence since the financial crisis began in 2008. They have had plenty of time to practice. In the past businesses might have been tempted to salami slice easier budgets – normally the ad and marketing spend. These days they know better: cuts that reduce the attractiveness of products or services to customers can be really damaging in the long term. A future focused company looks after its marketing department.
Our clients tell us that while they are keeping an eye on the election result, it isn’t affecting their overall strategy. Certainly, if the 3Search jobs page is anything to go by many companies are focused on building their business and growing their customer base through great marketing in 2015.