Credit crunch and skills crisis dent business confidence for 2008

18 December 2007 – A survey published today by the Chartered Management Institute confirms that UK managers believe 2008 will be a tougher year for business.  Many focus on the impact of rising business costs, higher levels of debt and a shortage of management skills.

The survey of 513 individuals shows an 11 per cent decrease in senior executives who are confident about the year ahead.  Asked specifically about business prospects for their organisations, 42 per cent claimed they are ‘optimistic’ about 2008, compared to 53 per cent last year.  Those who are ‘uncertain’ about what next year will bring has risen from 10 to 20 per cent in this year’s survey.  

Unsurprisingly, it is clear from the findings that the economic climate and higher business costs are taking their toll on business confidence.  56 per cent say the rising cost of energy will impact negatively on their business, while more than 1 in 3 (39 per cent) blame the credit squeeze in financial markets.  42 per cent also report they will be hit by the extension of maternity and paternity leave in 2008.

Respondents predict that a drop in consumer spending will hit business with 81 per cent predicting a rise in household debt and 40 per cent saying that personal debt will increase.  Only 28 per cent think that consumer spending will rise and, indicating pessimism over the economy as a whole, a similar proportion (29 per cent) also say that house prices will go up in the New Year.  Added to this, the majority (63 per cent) predict a rise in inflation in 2008.

Almost half of UK employers (48 per cent) in the survey also say that a shortage of management skills in the UK will have a negative impact on their performance in the New Year.  However, this does not seem to have prompted a greater focus on skills development with 1 in 5 (20 per cent) employers predicting a decrease in training and development, up 3 per cent from last year.  Another sign that skills development is low on the priority list comes in the finding that only 1 in 3 (34 per cent) plan to do qualifications and courses in the New Year.  This come in the wake of research showing that management qualifications are set to become increasingly important to individuals and their organisations over the next five years.*

Despite the pessimism, individuals are just as motivated as last year to be successful.  1 in 5 plans to seek promotion with their current employer and 1 in 10 say they plan to learn a new language in 2008.  30 per cent are aiming to make more money and 38 per cent report they want to spend more time with family and friends to improve the balance between their personal and professional lives.

Jo Causon, director of marketing and corporate affairs for the Chartered Management Institute, says:  “In the current climate, it is natural for employers to feel some degree of uncertainty.  However, the decline in organisations developing their managers is a great concern.  If employers fail to invest in the skills needed for long-term success, the UK will find it difficult to compete on a global scale in the future.  It is encouraging that some individuals are taking the initiative and planning to develop themselves through qualifications and higher education in the New Year.”

Respondents were asked to provide a long-term forecast after revealing anxieties about lower productivity around Christmas.  The survey found that although many agree that Christmas parties create a ‘better working atmosphere’ and are a good way to ‘thank staff’ (65 per cent), they also ‘dull the appetite for work (39 per cent) and ‘disrupt working patterns’ (42 per cent).     

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*Taken from Value of Management Qualifications, September 2007, report by Chartered Management Institute

Further information:

Mike Petrook /Julia Brook, Institute Press Office

Tel: 020 7497 0496; outside office hours: 07931 302 877

Email:press.office@managers.org.uk

Website: www.managers.org.uk

NOTES TO EDITORS

Representing 73,000 individual managers and 450 corporate members, the Chartered Management Institute is the only chartered professional body dedicated to management and leadership. The Institute supports individual members with practical guidance on the issues that affect managers in their day-to-day working lives and, as the guardians of national standards for management and leadership, it is also in a unique position to work with employers to identify and develop the necessary management and leadership skills that drive performance in the UK and internationally.  Through its research and policy programme, the Institute also analyses and shapes the issues that matter to employers and individuals, using its knowledge in open communications with key policy makers and government departments responsible for skills development.  The Chartered Management Institute came into being on 1 April 2002, as a result of the Institute of Management being granted a Royal Charter.