As the days get longer, prices of goods and services are starting to creep up. In the age of change, Brexit etcetera, etcetera – this will be the first time since 2012 that inflation is to move above the 2% target level as set by the government in 2003. And there is likely to be much more to come. Economists are predicting prices for products and services to continue to rise throughout 2017 and into next year. So what does that mean for businesses as Brexit negotiations start in earnest?
Consumer spending is likely to fall, but unemployment levels will rise to approximately 5% levels. The point here is that there has been a long-lag in the performance of the economy following the referendum and inflation and the effects upon business will not be felt fully until later in 2017.
But with all of the changes we will see because of the Brexit negotiations, no-one really knows what will happen to the economy next. Could hyperinflation be on the cards as overinflated property assets in UK and particularly in London lose value? The economic bubble that the UK has been within since the Olympics in 2012 could be burst or it may continue to ride the storm.
As with market conditions generally, it’s unclear. I think the outlook will fluctuate as the UK negotiates a safe exit – but costs, productivity levels and company growth will all be important indicators.
So, what does this mean for organisations? Well quite a lot (depending upon industry specifics of course) really. As costs rise further, employees want more in their pay packets and retention can be effected. But, as with everything there will be opportunities alongside the challenges.
Many other of the moving parts of the people agenda start to switch, and the leadership styles will need to adapt to manage the conversations differently. Also is your CEO and board prepared for leading in different times? It’s been so long since companies were faced with managing rising costs etc. that we need to question and plot out the capabilities accordingly.
Events in 2016 were unprecedented. 2017 looks to be more stable but 2018 is genuinely unclear.
Coming up in the next few weeks:
HR Taskforce – ‘Rethinking performance management – Liberated from reward, focused and fair.’ 26th April, Furniture Makers Hall
Working Futures event – Autumn Edition now being research and planned. 14th November 2017 at Business Design Centre, Islington.