What else is changing during the UK Recession

1. Long term low interest rates. UK savings attract low interest and those on index linked and fixed incomes will fare badly in the coming years. Economic impact: Will retirees compete in the labour market again?
2. Banking as a utility. Banks revert to the style of the 60’s, when knowing your customer and lending them only what they can afford to borrow were basic precepts. Economic impact: lending may be delayed a long time until people can rebalance their assets. Economic recovery may suffer.
3. Increased global regulation. We can expect a consensus around strengthening and ‘standardising’ regulation on a ‘global’ basis. Economic impact: This could go well or badly for the UK and London particularly. London markets may inadvertently (or deliberately) be adversely impacted by foreign/global regulatory intervention. Cost of compliance increases and innovation falls away.
4. Increasingly migrant labour goes home. Economic impact: Less social cost to UK of job losses. Fewer trades people to pick up new government construction initiatives designed to create jobs and raise country’s economic activity. Difficult to get construction projects resourced in the future.
5. Lower immigration as tougher visa restrictions imposed. Reduced birth rate in population as fewer immigrants arrive. Economic impact: Increased speed of ageing population. Faster/higher dependency ratio.
6. Reduced emigration caused by house values falling and a weak sterling. 1.5m UK residents a year had planned to permanently leave the UK every year by 2020. Older citizens (+40) staying in the UK longer than they planned. Economic impact:  Expensive citizens to support if unemployed. Distorting labour market with more, older talent than before.
7. Fewer Foreign visitors to UK and spending 20% less year-on-year. Economic impact: Less tax income and lower revenues and employment from Travel and Tourism industry.
8. Increased domestic tourism Car hire seeing a steep increase in bookings for UK-based trips. Recent car rental figures have doubled compared to last year. Economic impact: More UK tourism from UK residents. Suggesting that more families are now opting to holiday closer to home than abroad. Boost for UK tourism.
9. Declining trust (peer-to-peer, the media and institutions) Government finds it harder to communicate with citizens. Less desire to work for distrusted market sectors. Economic impact: Some sectors (investment banking, insurance etc.) could find it increasingly hard to attract scarce talent as the economy turns up.
10. New technology solutions. Innovative, technology based, stakeholder focussed, solutions could lead us out of recession quicker and reduce costs during it. Economic impact: Shorter recession, faster upturn/reduce cost to industry. Software-as-a-service (Saas) and ‘Cloud’ computing are operational costs (Pay as you go) not capital cost on balance sheet.
11. Growth in relying on the internet. More people are downloading discount vouchers from internet sites, finding bargains, ordering low cost food etc. This is the first downturn in the internet era. Economic impact: More business activity could go online, faster than originally forecast. Traditional providers lose revenues.
12. Emerging Green technology mass market? Despite the recession, companies are still setting aside a large chunk of their IT spending for green technology. Cutting cost is still a significant motivating factor behind green investments, along with reducing regulatory risk and improving public perception. Economic impact: Reduced industry cost and better perception of UK industry.
13. More videoconferencing. Up to 20% less business travel where videoconferencing is being used. Down 2m airline seats globally per annum. This may be a permanent change. Economic impact: Less flights and lower revenues to airlines and the Treasury and to UK inbound and outbound business travel and tourist industries. Downturn B2B exhibitions and conference business.
14. Increased mobile data services. 71% of consumers in February 2009 poll intend to make use of mobile data services daily. Significant ramp-up in 2009. Economic impact: Telco industry should do well in this wave. Resulting in a more mobile, connected work force.
15. More Outsourcing. 60% of major UK firms say they plan to outsource more. 80% say it’s to reduce cost. Is there the capacity to absorb this? Can standards be maintained? Will this rapid expansion reduce service quality across UK industry. Need ‘middle manager’ skills to manage outsourced arrangements but over 50’s being laid off. Economic impact: Reduced productivity, falling service levels. If outsourcing is offshored then job losses and tax revenues could happen.
16. ‘Speedsourcing’ - fast outsourcing. The established, offshore players with experience are most likely to win new business. India may win whilst locations like Vietnam may be considered too risky. Economic impact: UK becomes increasingly reliant on and vulnerable to changes in the Indian economy.
17. Growth in flexible working arrangements. Despite double the number of company failures in 2009 40% of UK workforce with children under 16 and carer duties will be eligible to ask to work flexibly. Only 8% of employers trust employees to work remotely. 42% of workers said they could work better at home. Economic impact: more costly working arrangements for companies to manage. Could disadvantage carers job security?  Employees continue to work ineffectively.
18. Externalise towards Rapidly Developing economies. (RDE) huge opportunity for business to focus on fast growing economies. Economic impact: Shorten recession if foreign revenues increasingly earnt from abroad.
19. CSR creates shareholder value but switching from environment to governance in the recession. Government will either miss or need to incentivise/legislate for environmental change to meet UK carbon reduction targets. Economic impact: More cost or more bureaucracy? Less conservation of energy resources, slower switch to sustainable energy sources and recycling. Economy remains vulnerable to next energy price hike in recovery. Slows down fledgling alternate energy sector.
20. Decreasing focus on environmental programs. environmental, social, and governance activities do create value for their shareholders in normal economic times. The global economic turmoil has increased the importance of governance programs—and decreased the importance of environmental programs—in creating shareholder value. Economic impact: Lessening focus on taking action on reducing carbon emissions exposes UK to missing these targets and incurring additional costs. It also means some players miss chance to reduce costs through environmental recycling and using less resources . This could make UK industry less competitive internationally when compared with other ‘greener’ countries companies.
21. Less Biofuel. Sugar cane pricing remains high due to forecast 2008-9 and 2009-10 shortfalls in supply. Ethanol produced from sugar cane in high demand in countries like Brazil but some plant manufacturing capacity being delayed due to economic situation. Economic impact: Could delay making ethanol a viable contributor to reducing UK carbon emissions from petroleum. Most carbon in UK comes from motor vehicles. IATA (representing 230 airlines) has committed that 10% of fuel used by its members will be from alternate ‘greener’ sources. Shortage of supply could slow take-up of ethanol powered transport.
22. Growth in ‘Green’ housing/buildings. Grants and financial incentives needed to develop green buildings. Government may be unable to fund this for years to come due to high cost of countering the impact of the recession. High cost of heating homes in UK and low efficiency makes UK less competitive. Economic impact: Building industry leaders see that decisive action on sustainability may actually stimulate economic activity and job creation, while cost savings can be achieved through less energy consumption and greater waste reduction.’
23. Over 50’s and new graduates hardest hit by job losses in recession. Higher wage earning over 50’s paid proportionately higher taxes. Tax revenues lost to the Treasury. Job experience lost to companies? Impact less ability to cope with change/complexity? Graduates may move abroad. (New brain drain).
24. Families more at risk in this recession. More women work, more single parent families and more female breadwinners. Women losing jobs alongside men. In the 1980 recession the industries they tended to work in, service, retail etc, were not deeply impacted. They are now and women workers predominate in these sectors which are set to be hit hard in this recession. In past recessions women working increased as they buffered falling household incomes. This isn’t available this time. Economic impact: Extra support needed faster for families this time around.
25. Women increasingly under prepared for pensions provision as they lose their jobs they may lose employers pensions provision and be more likely for pensions poverty. Economic impact: Additional cost to government and economy to support them in their later life.
26. Increasing Savings Rate 60% of Britons have changed their saving habits (5^th March 2009). Switch from debt funded spending £30bn in 2008 to savings £45bn could create a £75bn swing, equal to 5% of GDP. Economic impact: Deepens recession and/or Slows economic recovery as saving increases and spending falls.
27. Rising barriers to foreign students. More expensive visa process and more protracted. Last year 50,000 foreign undergraduates started studying in the UK. Said to be worth £5bn to the UK - split between fees and spending per annum. Economic impact: Loss of revenue. More students may want to come here because of weaker pound so could have benefitted the economy and themselves through recession.
28. Less graduate job opportunities. 5% Less graduate jobs over 2008. 50% more graduates entering the general job market (150,000) and potentially more graduates may be unemployed or go abroad to work. UK may lose them for longer than just the recession as their host economies entice them to stay on during the upturn. Economic impact: Loss of vital skilled workforce for UK will hit growth and performance particularly in high IP sectors. This will also potentially speed up the ageing of our society and the rate at which the Dependency Ration falls.
29. More funded Gap Years. As one professional services firm just did, pay new hire graduates £10,000 to take a ‘Gap Year’ and start work in 2010. Economic impact: Preserves graduates for UK economy and delays them taking up their graduate places until the work is there and keeps them off the job market and out of unemployment.
30. Increasingly debt burdened graduates. 300,000 graduates graduate in 2009. Average debt over £20,000. Total cost to economy to date almost £22bn. Economic impact: Will they pay it back? Will government need to ‘forgive’ these loans to keep graduates in the UK or entice them back if they’ve left?
31. Generation Wars. Generation Y ‘refuses’ to pay for the folly of Baby Boomer led business greed and governments who created the massive debt incurred in fighting the worst consequences of the ‘Credit-crunch’. They refuse to support the retiring generation through tax. They go abroad or ‘hide’ income from HMRC. Economic impact: Disaster for the workforce and tax revenues and increase the speed at which UK society ages and becomes uncompetitive.
32. Increasing creativity. Products, services, distribution methods, business models in both large and small firms. Increasing entrepreneurship. Economic impact: Accelerates economic activity and recovery.
33. Innovative start-up’s and small businesses. Driven by layoffs and increasing creativity during the downturn. Rapid growth of the networked-company. Economic impact: Accelerates economic activity and recovery. Challenge the large corporations.
34. Increasingly innovative auto industry. Car sales down nearly 60% in January 2009 on 2008. Commercial vehicle production down 60%. Duel energy source, new engine plants, maybe ‘magnetic’ engines needed to stimulate the auto market. To appeal to more cost conscious and ‘environmentally’ aware consumers. Economic impact: Recovery of automotive industry and economy sped up. Reduces carbon emissions.
35. More sole traders/consultants from the ranks of the retrenched/redundant white collar workers. Economic impact: Slower tax collection as sole traders delay paying tax for their first year in business. More mobile workforce/company structure but probably older workforce too.
36. Increased customer service and loyalty. Small and medium sized businesses saying that despite pressure to reduce price they will put their customers first and focus on increasing customer loyalty. Economic impact: Reducing costs to customers but increased service levels. Maybe reduced ‘Churn’ in some markets will expose poorer service providers and accelerate their demise and the rise of new firms.
37. Growth in stress and stress related illness: 75% in UK say the credit crunch will have a negative impact on their health. 90% expect money worries to lead to increased stress. Economic impact: less productive workforce, greater strain on the NHS, higher costs to employers of less productive workforce.
38. Growth in ‘Extreme Working’. More people working longer hours – to prove themselves to their boss and attending work when ill to demonstrate their commitment and working whilst ill at home. Economic impact: Off work longer potentially, spread illness to co-workers and more time off work by employers reduces company productivity and capacity. Increases the cost of running the economy and slows down output.
39. Increasing mental health problems. Could be a 26% rise, affecting more than 1.5million people in UK as a result of the downturn. Economic impact: Cost to NHS, cost to health insurance and cost to employers for unproductive workforce.
40. Reducing wellness. Consumers living on a strict budget eat half the recommended five portions of fruit and vegetables a day. Consumers abandoning restaurants for Low cost, high fat and sugar fast food – Domino’s, KFC and Subway all expanding their stores in 2009. Gym membership collapsing. Economic impact: Future cost to the NHS, acceleration of obesity and related illness, such as diabetes, less fit, able and well workforce. Increased cost to Health insurers, rising premiums. Lost productivity and earlier deaths of population. Service industry job creation in fast food sector.
41. Rising crime levels. Burglaries, motor thefts, robberies and bank and credit card fraud all rising. Bank fraud up 185% in 2008 on 2007. Economic impact: Higher insurance costs, higher costs of credit, stricter safeguards on credit being made available slowing the circulation of credit in the economy and making it more expensive. Slowing the recovery.
42. Growth in Internet advertising. Ad firms engaging in internet advertising are experiencing slower decline. This is protecting the Ad industry from experiencing the full potential of recession. Economic impact: More jobs preserved in the advertising industry that would otherwise have been lost.
43. Growth in DIY makeover. Relatively, room makeover products are doing well in the recession so far, down 3% at B&Q. More trades people will find work scarce because we are moving home less, moving into new commercial property less and doing a makeover ourselves. Economic impact: trades people may find work hard to come by and may be hit hard in this housing collapse led recession. We may lose the indigenous trades people we have which could slow economic recovery when it comes and drive rapid immigration again (Polish plumbers).
44. Reducing funding for education. Unemployed are looking to more secure public sector teaching jobs. 40% increase in online teaching job applications. Schools have a more austere future with less private finance available and fewer employees on loan and a curtailed government school building and investment program. Economic impact: Short term rise in teaching posts filled, reducing the number of people unemployed and temporarily swelling teacher numbers. Longer term decline in facilities available to educate school age children could set back plans for a highly skilled workforce in the UK. May be hard to re-engage companies after the recession.
45. UK population growth. Now 61m, will pass 70m by 2028 (ONS February 1st 2009). The fertility rate for UK resident women born outside Britain is 2.5, compared with 1.7 for those born here causing rapid growth and higher relative population growth from immigrants. The UK population grew by 434,700 in 2007. Economic impact: Right to live in the UK may enable these projections to happen. Working restrictions may mean new migrants need to be highly skilled. Either way a fast pace of change is set for the UK which could cause political and social unrest and impact our economic activity adversely.
46. Growing global population of 6.7 billion is expected to rise to 9.2 billion by 2050. 1.75m of the next 2.25m born in the world will be born in Muslim countries. This can change the balance of culture towards Islam and away from the mainly Judeo Christian roots of the existing developed nations. Population growth is considered the second greatest threat to the UK behind terrorism, but ahead of climate change. Economic impact: New global governance oriented away from Judeo Christianity towards Islam or Hinduism. This could change the relative competitiveness of the UK economy adversely if it is not ‘conformant’.
47. Falling new housing. Government admits it is falling behind targets for 3m new homes in the UK by 2020. London’s target of 50,000 affordable homes by 2011 is also unlikely to be met. 107,000 new homes built  in 2008 against 148,000 housing starts in 2007. Economic impact: House building job losses, construction and property development firms and suppliers close, against a backdrop of high home demand. Could increase depth of recession and leave UK with too few homes in the early upturn putting increased price rise pressure back into the system.
48. Generation-Y quits. 50% of young professionals feel they lack good work-life balance and, despite the toughening jobs market, would consider leaving their jobs as a result. Younger workers will have to accept that in difficult times decisions will be taken more crisply and workloads will increase. Their managers, meanwhile, will have to make an extra effort to keep Net Geners engaged and motivated. Economic impact: They could just find jobs abroad and leave. A brain drain of mega proportion and impact.
49. SAGA generation redundant (+50) unemployment rate rising twice as fast as any other age cohort. Forced early retirement and MRA’s limiting opportunities for this generation to get ahead and be re-employed. Economic impact: Experience lost from the workforce making it less able to deal with the complexities of more small firms and more outsourcing making up our economic activity.
50. Delayed retirement. 40% of over 50’s working say they want to delay retirement, 15% say by 5 years or more. This could lead to less mobility in the workforce as employees stay-on to longer before retirement. Defined contribution pension assets has fallen 35% from September 2007 to January 2009. The economic climate is one factor why people are staying on. Another is that 25% of those aged 55 are likely to make it to 95 and 10% to 100. Economic impact. Reduced workforce mobility but increased experience available. An older less adaptable and less energetic workforce is foreseeable.
51. Increasing teen pregnancies? In a bid to secure free housing for single mums. This would put further pressure on the social resources funded by the economy. Economic impact: Maybe there will need to be a new deal with social responsibility accompanying social welfare rites – a new deal?
52. Online is the new High Street. Christmas spending online was up 14% 2007 o 2008. Nearly 60% of us spent more online this year and 37% of shoppers did half their Christmas shopping online. Online searches for discounts grew by over 100%, a clear indication of how consumers are becoming more price sensitive and turning to the internet. Shopping online is likely to grow in 2009 and could eventually peak at 50% of all retail shopping and is being led by online grocery sales. Economic impact: Need to have more inclusive indices of shopping activity which include online spending to indicate market activity. Could lose VAT and tax revenues from products bought online from abroad. Could lose market share and business for UK retailers to foreign competitors. The postal industry however should have an increasing boost in business. Consumers could save up to £13bn if everyone bought all their products online and therefore potentially reduce UK economic activity ‘permanently’.
53. Profit squeeze for retailers. 3% fall in retail sales, but food is expected to rise 3% leaving the non-food sector liable to fall by 7%. At the same time 5% increase in costs expected to continue and unlikely to be able to pass this on. Economic impact: Non-food sector will be squeezed in revenues and margin and will seek to reduce costs and shed labour, delay investment and exacerbate the recession.
54. Growth in convenience stores? More people have been shopping locally in the downturn it was announced in November 2008. Sainsbury's will open 50 convenience stores in 2009. Waitrose opened it’s first convenience store in December 2008. This trend may have been a result of people using their cars less. With fuel back at around $40 a barrel people may be lured by the lower prices of the large discounter and out-of-town stores. Economic impact: Poorly performing convenience stores sector put under even greater pressure by majors entering their market which may not continue to boom. More job loses and business failures.
55. Growth of Discount Stores. German Aldi and Lidl have seen sales surge. 50% of Aldi's shoppers are now white collar. Economic impact: Pressure on prices and competitiveness of UK supermarkets may cause Job losses and failures whilst attempting to compete with discounters rapid expansion plans. This may lower the cost of shopping for many though.
56. China rising. In 2007 China surpassed Germany to become the third-largest economy in the world next will be No. 2 Japan. The global economic crisis is bringing down Chinese growth figures to around 8% for 2009 but that's better than the economic performance the major industrialized countries will experience. In 2007, the gap between the growth rates of China and other big countries was huge. In 2009 the gap between them will be even bigger. Economic impact: China may dominate the world economically and ultimately politically even earlier than forecast if these predictions turn out to be true. Global governance will increasingly favour China and their ‘friends’ rather than the old arrangements amongst the industrialised nations.
57. Failing Small Businesses. There were 4,607 compulsory liquidations and creditors' voluntary liquidations in England and Wales in the fourth quarter of 2008 - up 51.6% compared to the same period a year ago. That equates to one in every 150 companies going into liquidation. Economic impact: A failing SME sector could hurt innovation and market upturn and contribute more job losses.
58. Rising Religious interest ‘Back to Church Sunday’ attracted double the number of people to attend in 2008 over 2007. The Church of England is confident of retaining 10 to 15% this year nationally, meaning an extra 3,000 to 4,000 congregants nationally. Economic impact: Relief of stress and support for a ‘hurting’ nation. More relaxed, healthier workforce.
59. Rise of extreme political parties disillusionment with the Government among traditional Labour voters may tempt them to support the BNP or not turn out at all for the European elections. The British National Party is on course to win its first seats in the European Parliament this year. Economic impact: Two MEP’s won’t really make a difference but it might signal something rather austere about future UK politics and change the climate of discussion around immigration – which could impact the economy adversely.
60. A permanently changed consumer? About 3.8m people have negative equity in their homes or are about to. Another 1.2m will be hit if house prices drop by a further 10% to 20%. 7.2m are planning to use their home as part of their pension and are likely to be hit by falling house prices. The shift to negative equity has the potential to be a mammoth welfare disaster for the nation. Economic impact: It may take many years for people to feel affluent again based on the value of their principal asset – their home, reduce their rate of saving or debt reduction and start spending again. This could stall the economic recovery for a long time.
61. Rising risk of protectionism. US and other economies raise barriers to free trade. Economic impact: UK economy damaged.
62. People go back to basics. Ethical, save hard, work hard, developing tangible products and services. Economic impact: Deepens recessions and/or slows the recovery as we slow down spending, pay back debt and save more.
63. Relatively slower recovery. Other countries less debt burdened may recover faster – Brazil, India, Russia, even China etc. UK slips relatively behind their competitors. Economic impact: UK becomes less competitive and world influence falls.