Paying ÂŁ1.25 for a liter of petrol might sound civilized, but when translated across the pond, paying $10 a gallon makes even those well-numbed to high gas prices cringe. With the faltering U.S. dollar, rocketing gas prices, and exposure to the sub-prime crisis, the U.K. has not survived as unscathed as it has in past European recessions.
Sandra Hill, managing director of The Hill Group, an MRINetwork office in Manchester, England, says that mid-level management and executive hiring has remained steady, but hiring has weakened at the lower end. For companies that are hiring, the process is taking much longer. “Managers are becoming more careful, and they are double-checking with their bosses to ensure that the responsibility for hiring decisions is being shared.”
The U.K. has one of the most service-focused workforces in the world—more than 80 percent—causing it to be sensitive to the effects of the global credit crunch. Many banks and insurers had large exposures to the U.S. credit market, though no U.K. firms, as of yet, have actually faced collapse like those in the U.S.
Despite the hit to the services sector, many pockets of strength remain. Aging nuclear plants and the government’s distaste for
importing power from Eastern Europe are driving energy plant construction. The U.K.’s military involvement in the Middle East has increased defense spending, as older equipment has become worn out. This summer, the Ministry of Defense (MoD) signed a contract to buy two Nimitz class-sized aircraft carriers at a total cost of £3.9 billion from the U.K.-based BAE Systems. Aerospace also has been helped by participating in the manufacture of the Airbus A380, and will be aided further when the MoD replaces its aging Harrier Jet fleet at a total cost of approximately £10 billion.
As in many other parts of the world, U.K. employers are starting to feel an increasingly severe engineering talent pinch. “In 2006, we had 20,000 engineers graduate, which is very low if you think that in 2006, Japan had 100,000 and China had nearly 500,000,” continues Hill. “Whilst in the past, so-called blue collar workers were coming to the U.K. to fill manual labor positions, U.K. employers will soon be forced to look internationally to fill more skilled posts too.”
Though most sides agree the state of the economy is not entirely his fault, Prime Minister Gordon Brown has become a lightning rod for the U.K.’s woes. Labour Party officials say there won’t be a leadership election despite the calls for it, as many in the party are voicing concerns of losing power in the parliamentary election, due in 2010, if Brown heads the ticket.
It used to be said that the sun never sets on The British Empire. And while the horizon still looks bright, a brief eclipse seems to have taken away some of the luster.
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