With recession looming over the UK, uncertainty is creating an atmosphere of fear and confusion. Finding out exactly what is happening and why, is the best way to help prepare your business for what lies ahead.

Modern Monetary Theory (MMT) has had a profound impact on global economies over the past 10-years, leading to a variety of consequences. As banks worldwide printed money, to stave off the worst effects of the 2008 banking crisis, investments such as stocks and bonds all went up in value. Global economies became somewhat ‘addicted’ to the growth created by low interest rates and free money, as we saw the first companies valued at $1tn (Apple, Microsoft) and the first $100bn, $200bn and $300bn net worth individuals. This is what many refer to as, the “Everything Bubble”. 

If at this point you are thinking, “Well, what’s so bad about that?”, then you are not alone. But unfortunately, we didn’t know when to stop and in the words of J. Mulraj, a reporter at the Times of India: ‘But, of course, insanity does have consequences, as we are finding out’. 

The combined pressure caused by a series of events including the global disruption to supply chains, excessive demand for products, and “loose” fiscal policy rolled out by governments post Covid has caused the “Everything Bubble” to pop. And we cannot forget Russia’s invasion of Ukraine, which skyrocketed the price of fuel and disrupted food supply across Europe.  

While there is reason for hope, as supply chains start to rectify themselves, commentary has been doom-laden with the independent Office of Budget Responsibility warning the UK will remain in a recession for the whole of 2023. 

So, what can we expect for the labour market? 

When recession hits, most organisations tend to react in a similar way. A professional stop, drop and roll, if you will. HR teams will freeze any hiring initiatives, company investments are put on hold and unfortunately, many businesses will look to streamline their workforce through layoffs. As we are currently in a position of record employment, wage inflation is likely to remain high for a while longer. However, this could change very quickly in 2023/24 as unemployment rises.

An absence of capital and low or non-existent growth will see a fall in demand for resources, including talent. However, layoffs in the Tech and Financial sectors could provide short-term opportunities as sought after talent becomes available in a lacking talent market. We are already witnessing large-scale layoffs in the tech sector, as Google announces it is cutting 12,000 jobs globally and Microsoft also plans to cut 10,000 workers.    

Those parts of the economy which have experienced huge growth off the back of low cost and free money over the past ten years may not return, which is a frightening prospect. However, it is important to remember that the economy is cyclical and so what comes up must come down…and then back up again!

To find out how you can prepare for and thrive in this changing climate, download our report which explores the five mega-trends impacting talent and skills in 2023 and beyond. In this guide, Phill Brown, our Practice Director – Data Analytics & Insights, will offer predictions for the future, as well as actions that businesses can take to adapt to each mega-trend and operate effectively in the new world of work