As much as it pains me to admit it, the economy is still in shambles even though it’s been years since the credit crunch – and could be limiting contracting.
British businesses have been struggling to stay afloat since the dark days of the recession, and with the economy only finally starting to show signs of any sort of sustained recovery years later, anyone employed by these firms has likely had a rough go of it, what with rampant job losses and wage freezes ravaging the average Brit’s ability to make ends meet. Many former permanent workers have through necessity transitioned to interim working, either as a freelancer or through an umbrella service company, and for the most part firms are glad to use temporary workers to keep productivity up since contractors cost less to utilize than a permanent employee.
However, with economic recovery efforts turning out to be so sluggish, many companies have found it a trial to even use contract workers at all because their current business volumes simply won’t support the extra outlay of cash, even on a per-project basis. Much of the problem has been blamed on a lack of access to capital that could otherwise be used to grow a business through these economic doldrums, and official figures say that Government initiatives to kickstart lending to businesses – especially small firms – have fallen flat.
The Funding for Lending scheme in particular was singled out by the Bank of England recently for not influencing the economy in a positive manner. Designed to entice banks and building societies to make business loans, mortgages, and other high profile lending more accessible, the scheme has proven to be quite unsuccessful; in fact, 2012’s 4th quarter saw net lending actually drop by £2.4 billion, despite the fact that the scheme had made £14 billion in ultra-low cost wholesale loans available to lenders, and without the requisite funds to grow their business, many firms have had to tighten their belts – and that means scaling back their budget for permanent workers and freelancers alike.
For what it’s worth, I can see how something like this could happen, though it indicates to me at least that the economy in the UK is much more worse off than I thought at first. When businesses don’t leap at the chance to leverage the growth of their firms in a cost-effective manner by using contract workers instead of permanent ones because even that would be too costly, it’s an absolutely ironclad example of the financial distress that too many British companies are facing as a result of the steep economic downturn and shallow recovery efforts.
