Is it helpful to cut employment numbers to save costs in the short term?
Over the last few weeks we have focused on the UK economy and in particular the ever-growing number of unemployed in the UK. Company after company have been announcing job losses and cost cuts to try and stabilise their businesses in the short to medium term and reduce their costs as much as possible. However, is there a danger that cost-cutting in the short term could lead to reduced consumer expenditure which could again lead to more cost-cutting and a vicious circle?
This is an interesting angle on the short-term cost reductions we have seen in the UK across the vast majority of sectors. While many companies appear at this moment in time to have no choice but to cut their costs there is a feeling that if UK banks were able to support various operations for a short period then the very fact that more people would be in employment would see higher consumer spending and ultimately should see the UK economy recover quicker. This is a very controversial view but one which is attracting more and more economists and analysts in the UK. In many ways, short-term cost-cutting can lead to a self-fulfilling prophecy of reduced expenditure, more cost-cutting and yet lower expenditure.
Share this..
Related stories
Zero-hour employees earn £300 less than permanent
15/12/2014 People on zero hour contracts in their place of employment end up earning £300 less per week than permanent employees, a new report has shown. The report, carried out by the Trades Union Congress (TUC), showed the average weekly earnings for zero-hour workers is £188, compared with £479 for permanent staff, even when doing the same or similar jobs. The report also showed tha...
Read MoreDevastating floods could cost insurance industry over £100 million
The devastating floods in Cumbria and South Scotland could cost the UK insurance industry in excess of £100 million although this figure could rise significantly because the flooding has yet to subside. We have literally seen homes washed away in the flood water, vehicles left battered on the road site and indeed we have seen the unfortunate sight of casualties and fatalities during the floods....
Read MoreMPC appears split on extension of quantitative easing programme
The Bank of England MPC (Monetary Policy Committee) appears to be split on the subject of quantitative easing and a potential extension of the ongoing program. Last month's meeting appeared to give a rather upbeat view of the UK economy and the future success of the quantitative easing programme, although the last few days have seen this upbeat stance start to show cracks.
Interesti...
UK stock market posts worst year on record
The UK stock market has today posted the worst year on record with a fall of just over 30% in UK stocks over 2008. And while there were hopes that 2009 would see a substantial improvement in the UK economy these hopes appear to be fading very fast with the outlook for the UK stock market still very cloudy. While the UK banking sector has grabbed the headlines over much of 2008 it is the housebuild...
Read MoreLondon financial markets under attack from the EU
A French official this evening "let the cat out of the bag" with regards to EU plans for financial regulation throughout Europe. London has for some time been one of the major financial centres of the world although apparently the EU regulators are looking to complete a "pincer movement" which should see power transferred from London to Brussels. So what exactly is going on?
The Fre...