Crystal Umbrella

The Institute of Directors (IoD) has produced a new report which makes gloomy reading for umbrella companies and limited companies alike, forecasting only marginal growth for 2011. According to the study, growth will reach a mere 1.2 per cent this year, appreciably lower than the government has predicted.

The IoD isolates five main reasons for such a feeble economic performance during 2011. These include a flat savings ratio, rises in interest rates, a decline in spending, reduced household incomes and what the organisation refers to as “anaemic broad money supply growth.” Taken together, these factors will act as a drag on economic performance, the IoD believes.

Commenting on the report, the IoD’s Chief Economist, Graeme Leach, said that the UK economy is at greater risk of an error in monetary policy during 2011-12 than it is from a mistake in fiscal policy. In particular, he singled out rises in interests rates for special criticism. To do so when the money supply was so weak, he said, could not only undermine recovery but risk a double-dip recession.

Mr Leach went on to say that he believes the public spending squeeze should proceed as planned, but added that the Monetary Policy Committee should resist calls to raise interest rates. Broad money supply statistics, he continued, suggest a case for an extension in the government’s Quantitative Easing measure if such feeble monetary growth continues.

There was better news for contractors in the IT skills market in a new report from the recruitment company Reed, however, showing that private sector openings for IT workers reached a 14-month high in February this year.

Tags: Umbrella Companies

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