Tag Archive | "public sector spending"

Could public sector cuts benefit small businesses?

It’s not all doom and gloom in the business sector. In fact some firms believe that they will profit from the government austerity measures.

Admittedly many businesses are going to lose public sector contracts, but the job losses could well create outsourcing opportunities. Last week, the government announced that £236bn of public sector contracts would be made more accessible to SMEs. In a bid to ensure that 25% of public sector contracts do in fact go to smaller businesses and limited company contractors, all government departments will be required to publish details of all the contracts they award, and how many go to small firms.

The coalition is also looking into a more open framework to tackle the closed procurement system which generally means contracts are awarded to preferred bidders which are usually bigger organisations.

Other good news came recently when figures were released showing the economy grew at twice the expected rate in quarter 3. Experts say a double-dip recession is less likely as data from the ONS showed the economy is growing at the fastest rate for 10 years.

However, these figures do not take into account the public spending review and the impact it will have on the country.

Nevertheless, the better than expected picture could encourage investors to start thinking about expanding their portfolios. The stock market can seem to be contradictory in times of economic crisis. In 2009, the UK was in recession and yet the stock market rose by around 30%.

Before contractor accountants rush out and pile all their money into stocks and shares, they may want to consider talking to a specialist financial advisor.

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Image: Go with the flow – 080920099255 by roland

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May you live in interesting times…

Never has the old Chinese curse seemed so relevant!

There was an interesting article on Radio 4 the other day as I was driving from the airport to work. It took the average UK family’s net income of £20,500 and used that to illustrate what the nation’s finances would look like on that scale. It turns out that the family would be borrowing £6,500 a year on top. That’s borrowing to spend on the weekly shopping, mind you, not borrowing to buy cars and houses and plasma screens. Worrying, isn’t it…

Then they looked at the various plans to cut that borrowing. The best case, apparently, would reduce it by around £250, leaving £6250. Not exactly encouraging.

So what would this mean for us freelances? Well if I knew that I’d be a rich man, but the obvious conclusion is that public sector spending will need to come down with a bit of a bump. That’s bad news if your contract is in the Public Sector, since the knee-jerk reaction of accountants everywhere is to ditch the agency workers first.

But it’s worse than that…

It means there are fewer jobs available for the freelance to apply for in the public sector, so they’ll have to look elsewhere. The problem is the market these days is so polarised into market verticals, that agents are usually incapable of putting people forward for a role if they aren’t already working in that vertical. So all the ex-public sector people become instantly unemployable.

And there’s more…

Also likely to be removed from full time employment are a raft of middle managers and back office workers. They’ll have to go somewhere, so there will be even more job seekers out there trying to grab whatever work is available.

And finally…

If the markets don’t like the new Government and their spending plans, then the stagnation in new business development will continue and contracts will become even scarcer. On the other hand they may see the new Government as the equivalent of the Second Coming and all of a sudden everything goes rocketing away. That would be nice, only I have the nasty feeling that the agencies are not so used to dealing with commoditised contractors that they will have to re-learn how to deal with a market where demand exceeds supply; after all, they haven’t had to for at least five years.

End result? Who knows; either there are fewer jobs to spread around more people and rates will be forced down for those in work, or there will be more jobs but proportionately more people going for them, meaning rates will be forced down…

Looks like an interesting – and slightly worrying- few weeks coming up.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Worries by privatenobby

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