Last year, the global economy defied expectations in potentially history-making ways. Despite challenging conditions – wars, escalating inflation, and the most significant interest-rate surge in four decades the global economy managed to avoid a major downturn, instead experiencing a steady slowdown. This was an unfamiliar plotline: It implies the world economy held some resilience in ways we might not yet fully understand. Looking ahead to 2024, the World Bank’s latest “Global Economic Prospects” report predicts that global growth will slow to 2.4% before edging up to 2.7% in 2025. This forecast provides optimism for avoiding a global recession. However, certain factors, including a notably weak UK market, heightened uncertainties regarding conflict escalation, and fluctuating energy prices, will continue to introduce unpredictable elements into the economic landscape whilst interest rates are likely to remain elevated for the foreseeable future.
Worryingly for the executive outplacement market, corporate restructuring specialists Begbies Taylor warned that the number of companies in critical financial distress in the final quarter of 2023 had risen by 25.9 per cent on the previous three months. Meanwhile a hiring pause has led to demand for workers falling to its lowest level in a decade, according to business advisory firm BDO’s employment index.
For in-post senior leadership, head down and business as usual is not an option. They need to meet the current climate with a dynamic plan of action; to actively prepare for each predictable challenge while optimising every opportunity for growth and improved performance by incorporating disruptive technologies into forward planning strategies that fully involve every department and every function.
And for those seeking a new opportunity or facing executive outplacement, challenging times mean doubling down on efforts to identify and seize the openings that are still most definitely out there.
Here, we offer our review of the market, look ahead to the coming months, seek out any bright spots and advise on how best to take the driving seat on what looks like being another bumpy ride.
Latest ONS labour market overview estimated that vacancies in the UK fell in the final quarter of 2023, down by 49,000 to 934,000. It was the 18th consecutive fall, the longest continuous downturn on record. Wholesale and retail was affected most of the 17 out of 18 sectors that experienced a drop, down 13,000.
However, openings do remain above pre-Covid levels, up 133,00 since January-March 2020. Similarly, payrolled employees were down 24,000 on the month but up a percentage point on the previous year and 1,195,000 since February 2020 to 30.2 million. Unemployment was unchanged on the quarter and up by a fraction over four years.
The total number of online job adverts on January 12, 2024, was down 16% on the previous year – but it had risen 3% in a week. Vacancies fell furthest in small companies employing 0-9 employees followed by the largest, with workforces over 2,500.
The International Labour Organisation (ILO) redundancy rate for the UK in May-July, the most recent figure available, was 3.6 per 1,000, higher than any time since July 2021 but comparable to pre-pandemic levels.
Earnings increased across the board, up by an average 6.5% including bonuses in September to November 2023 to £666 per week, a little higher in finance and business, up 7%. Accounting for inflation, total real pay rose by 1.3%, the same as the previous three-month period.
The global economy defied World Bank predictions and multiple pressure points last year to deliver 2.6% growth, largely down to the US economy and strength in some of the emerging markets including Brazil and India.
Another year of raised interest rates, increasing geopolitical tensions and inflated energy and consumer prices after the system shocks of the pandemic and Ukraine War will really test its resilience. The World Bank is talking about further slowdown to 2.4%.
This time last year we were focusing on conflict in Ukraine and its impact on oil and gas prices. This year, there is also a very real chance of Israel’s war on Hamas in Palestine spilling over into the region. The UK and US are already bombing Houthi targets in Yemen in a bid to halt their pirate attacks on commercial shipping routes which are severely disrupting movement of goods and tensions are building with some of the oil-controlling Arab nations.
Further expansion of hostilities to Iran and beyond could destabilise global economies further. Though a glimmer of hope comes with tentative talk of a possible two-month ceasefire. That might be enough to allow imminently-anticipated interest rate falls in the US and government fiscal stimulation in China to brighten the immediate outlook.
Russell Investments’ 2024 Global Market Outlook suggests that the UK faces the greatest risk of recession of the major economies as it struggles to bring inflation down, delaying any release of the fiscal brakes. Inflation is remaining stubbornly at 4%, down from its 2022 high of 11.1% but still double the Bank of England’s target to start cutting interest rates.
Meanwhile thousands of companies servicing debts built up during years of record low interest rates are reaching the limits of their financial subsistence. Almost 50,0000 are in critical distress.
A sixth of companies say they are planning to reduce staffing levels, led by a downturn in tech and construction, while many more are stalling recruitment until they see real signs of recovery.
Consumers, who had been propped up through the lean times by government support and savings accrued through Covid, are running out of funds and now spending less and borrowing more.
So, the word of the first quarter of 2024 is just as it was this time last year: caution.
Fittingly, we may start to see some green shoots in spring, when the government is expected to introduce tax cut sweeteners worth £20 billion ahead of a General Election, mooted for autumn. Along with anticipated interest cuts, they could help push the engines of the economy out of neutral and into first gear.
No matter how much uncertainty may lay ahead, dynamic leadership will not be assuming a watch and wait attitude. Just as market investors can profit by buying the dips, periods of stagnation present the chance to audit and strengthen assets, streamline processes and work towards readiness to leap into action and take full advantage of opportunities when the economy starts to turn.
It will undoubtedly be a more challenging market to enter and find success in. In December 2023, there were 863 publicly-advertised chief executive vacancies, down from 1,131 in January 2023, and 348 chief finance officer roles, down from 539 a year ago, according to Adzuna research.
Still, those vacancies are there and need filling and the drop in quantity does not equate to a fall in the quality of positions available.
So what can candidates seeking a new role or facing executive outplacement do to boost their chances of landing a prime position, suited to their skill sets and experience, in such a bleak job market?
To summarise, then, we would issue an amber warning for the first quarter of 2024: more storms ahead but a chance of brighter skies for those who can weather them.
Rialto can help you refine and target your search when going through executive outplacement or executive transition with one-to-one personalised support. We have helped many thousands of c-suite clients win prime roles in competitive markets in almost every country around the world. Contact us for a free initial consultation.
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