UK
employers have reasons to be cautiously optimistic despite the unprecedented
economic challenges facing the world’s economy.
Graeme
Leach, chief economist at the Institute of Directors, told delegates at the HR
Forum that there were no economic models that capture the current state of the
economy.
The
combination of the impact of the war in Iraq, the stock market’s rapid boom and
bust and what Leach described as “synchronicity” – a simultaneous downturn
across all the worlds economic regions is unique.
Leach
explained: “In the early 1990s the US was weak but the Europe’s economy was
boosted by the unification of Germany and Japan was still going strong.
“In
the late ’90s when Germany and Japan slowed the US recovery came on stream
strongly.
“At
the moment Japan is going nowhere Europe is stagnating and everybody is looking
to the US economy, but that is still weak. As a result I think we are in the
middle of the most uncertain economic period for 50 years."
However
Leach said that there is good news amongst the gloom. The US economy seems to
have fended off the worst effect of the stock market boom and bust and was
suffering only a what appears to be a shallow recession.
Leach
said swift end to the war in Iraq is another reason to be cheerful from an
economic point of view because of the subsequent drop in oil prices.
“The
UK is also better placed than most countries. The monetary policy committee
still has plenty of scope to cut interest rates. I think we can muddle through
in this country during 2003 which is no mean achievement considering the body
blows, which have hit the world and UK economy,” he said.
Leach
is optimistic employers will not have to make significant redundancies and will
benefit over the coming months from a gradual improvement in trading
conditions.
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