The pace of economic recovery was slowing quite markedly towards the end of last year and this is likely to continue into the first quarter of 2011. The effect of the VAT increase and the pain of public spending cuts will both be felt across much of the economy. We will not get quarter one's GDP results until the 27th April just before the local elections and the referendum on voting reform. We are likely to see lots of media coverage at this time saying the coalition Government is about to collapse because of voting reform, a possible double dip recession and protests about the cuts. So the political environment early in 2011 will also be volatile; however once we are through this period things will improve.
The jobs market will remain fragile with unemployment creeping up to 2.65m by the middle of 2011. However there is a consensus amongst economic forecasts that private sector investment and trade will pick up and start to accelerate in the second half of the year. This will start to stimulate the creation of new jobs.
Our market assessment for 2011 is that the recruitment sector will start to grow again following the 30% reduction between 2008 and 2010. We think the market will recover slowly driven by two factors the desire of individuals to change job - a factor which we know has been suppressed during the recession and secondly - many employers not just replacing those leaving but hiring to help meet increased demand from customers.