UK employers have reasons to be cautiously optimistic despite the
unprecedented economic challenges facing the world economy.
Graeme Leach, chief economist at the Institute of Directors, told delegates
at Richmond Events’ HR Forum that there are 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 world’s economic regions – is unique.
"At the moment Japan is going nowhere, Europe is stagnating and
everybody is looking to the US economy, but that is still weak," he
explained. " As a result, I think we are in the middle of the most
uncertain economic period for 50 years."
However, Leach said there is some good news amid the gloom. The US economy
seems to have fended off the worst effect of the stock market boom and bust,
and is apparently suffering a shallow recession.
He said the swift end to the war in Iraq is another economic reason to be
cheerful, because of the subsequent drop in oil prices.
"The UK is better placed than most," he said. "The monetary
policy committee still has plenty of scope to cut interest rates. I think we
can muddle through during 2003, which is no mean achievement considering the
body blows which have hit the world and UK economies."
Leach is optimistic that employers will not have to make any significant
redundancies, and that they will benefit over the coming months from a gradual
improvement in trading conditions.